QA 52 – When Should I start my Business LLC?

In today's Q&A, we are helping Joe Chang decide when to set up his first business entity. Do you have a question you want answered on our podcast? We would love to help you! Click here to ask your question! Resources Mentioned in this Episode Episode 13 with Josh the CPA Our Accountant - The Bottom Line Let's dive into this week's question! JOCELYN: Hey y'all you are listening to a Q and A with S and J. SHANE: Welcome to the Flipped Lifestyle podcast where life always comes before work. We're your hosts, Shane and Jocelyn Sams. Join us each week as we teach you how to flip your lifestyle upside-down by selling stuff online. Are you ready for something different? All right, let's get started. JOCELYN: Hi guys, welcome to today's Q and A mini podcast where we have a question from Joe Chang and Joe says, here is my question: in episode 13 Josh, the CPA, explained a little bit about different business entities but should I setup a business entity instead of operating as an individual, should I set it up at the very beginning or when I see some real money coming in? alright Joe, let us preface this answer by saying that we are not legal professionals or accountant so just keep that in mind when you listen to our advice, but honestly it really doesn't matter especially at the beginning when you operate as an individual or as a business entity. We waited a long time before we applied for our business entity and we actually operate as an LLC now but there are other ones out there that maybe more appropriate for you just depending on your situation. But really until you start making a whole lot of money it really technically from a tax standpoint, doesn't matter that much if you are an individual or a business. SHANE: And basically it's pretty easy to setup a business account. You can either in some states they let you do a DBA. You can just say I am doing business as Sams Digital Company and go start a bank account for that business and there your business. Other places, you just apply with your state. It's usually just a little paperwork, I think it costs like 50 bucks or something to start-- JOCELYN: Yes, it's not super expensive. It depends on your state. SHANE: Yeah so I mean it's extremely easy to start a business. There is probably no excuse not to do it. I would say just make it general. Like we have, our business is called Sams Digital LLC and the reason we called it that is because it's kind of like the umbrella that sits over top of each individual website which is kind of its own business but they all kind of funnel to the same bank account so it's not a real big deal. So I would just start something that's kind of general and just whatever business you end up doing you can add to that. The morale of the story is this, it really doesn't matter unless you are trying to protect yourself from some kin dof a liability. Like if you have an LLC they can sue your company and you can protect some of your personal assets instead of coming straight after you if you're just an individual. It's a lot of semantics. It's really not a big deal. It's so easy to set it up, there is probably no reason not to do it from the beginning. I wish we had have just so we could have got it out of the way. Don't you think Joce? JOCELYN: Yeah, it's a lot easier moving forward if you set up your business from the beginning. I mean it technically doesn't matter especially if you're not making a whole lot of money, it doesn't matter that much. But it may make things easier down the road if you go ahead and set it up from the very beginning and the best thing to do is to talk to somebody who is a professional at this. Especially in your state or somebody who knows about your state and they can tell you all the tax implications and all the liability questions and all of those types of things that we don't really 100% know the answer to, we can just share out experiences with you.