Do This BEFORE You Set Up Your LLC

today we're going to be talking about the things that you need to do and think about before you go running off to the secretary of state's office to go ahead and file your llc ready let's do this hey gang welcome back to the channel my name is jim and if you're new here i am an online business lawyer and a youtube entrepreneur and on this channel we give you the legal and practical tips that you need to start build grow and yes legally protect your online business so that you can achieve true wealth as well as freedom of time freedom of location and financial freedom as well and today we're going to be talking about the various considerations that you need to be thinking about before you go ahead and file your llc and i know all of you are out there and you're like no i just want to go i just want to get this paperwork done and i want to get it filed and completed as soon as possible as entrepreneurs that's the way we normally think however when it comes to the legal aspects of protecting your business this isn't always the best way to go about it because if you make a mistake it can actually cost you a lot more time and money to fix that mistake later on so you want to make sure that you get this right from the very beginning and in a world where every single state in the united states has a different set of rules and procedures for how to set up your llc it can be confusing and things aren't always intuitive or easy and you might be worried that you're going to mess something up so today i want to share with you six things that you should be thinking about before you run to the secretary of state's office and by run i really mean like type on your computer because almost all of them are online to go ahead and set up your llc so the very first consideration is decide do you actually want to start a business is what you're doing with your online endeavors is this a hobby is this something that you're just doing your spare time for fun is this something that you're even are you even earning money with this if the answer to any of those questions is that you know this is not a legitimate business it's just a hobby it's just something you enjoy doing on the side then chances are you probably don't need an llc but if this is a legitimate business and if this is something that you plan to grow and invest a lot of time in and if you're at a day job right now that you actually plan on leaving that day job at some point to work full-time in your business then yes setting up an llc might be the right thing to do at this point so assuming your answer to the first question is yes you do want to build a legitimate business the second thing you need to do is validate that business i talk a lot about this in my courses and in my memberships and what we're talking about here is basically going out to the market and making sure that people are actually going to pay you for your idea listen i'm all about you know setting up your llc and getting the legal protections in place but i do have serious concerns that there are people out there that are setting up llc's that don't have legitimate businesses or they have businesses that just they haven't matured to the point where people are actually going to pay them for anything so i don't want you going out there and spending a lot of money on an llc for a business that's basically going to be upside down in just a couple months so i want you to go out there and see if you can actually get at least one person to purchase something from you if you can do that if you can get somebody to buy something from you then chances are you've got a pretty good idea and you need to go and set up your llc now i've done another video that says um it's called llc not so fast i'll include a link to it right over here i think and uh you can check out that video talks about why maybe you shouldn't set up an llc right away i will tell you i posted that video a couple years ago and my thoughts about this have actually changed a little bit and now i'm kind of of the mindset that you really want to get that llc set up as quickly as possible as soon as you decide that you actually do have a legitimate business that people are actually going to pay you for your products or services and so if you watch that video and you think oh maybe i can hold off four or five months to set up your llc i don't really believe that anymore i think that you need to get your llc set up as soon as possible so that's the second thing can you validate your business idea are people going to pay you if so let's move on to the third consideration and this one is actually pretty easy this one is you need to pick a state and i say that because i still to this day get a ton of comments on the channel people wondering where do they set up their llc i just got an email from somebody this morning says that people are telling him he needs to set up his llc in wyoming or delaware maybe but in all likelihood probably not so unless you're planning on being like the next facebook or twitter or something like that where you're going to be getting a lot of money from outside investors and maybe it makes sense to file someplace other than your state chances are for most of you that are watching these videos you're a solopreneur or maybe you've got a partner uh one or two partners or maybe you're in business with your spouse and you probably don't need to file someplace other than your own state i would say in almost every situation filing in your home state is the right choice it's very very rare that you would find the need to file someplace other than your home state and i realize that there's a lot of these it's very trendy right now to say oh go file in wyoming because of privacy or filing no mexico because you can do anonymous llc's or file in delaware because that's the laws are more favorable to your business that is all and frankly it's just a way to get you to go and file in those states and use registered agent services in those states where you don't live and frankly if you're still living and working in this in some other state that's not one of those states then you need to file as a foreign entity in your home state as well which makes no sense because now you're paying llc fees in two separate states you're paying for registered agents in two separate states you're paying for business addresses in two separate states you really don't need to do that so just file in your own home state that's the easiest way to do it and yeah that that's so pick a state but the state's probably going to be where you already live all right number four is one that people a lot of people really overthink and they really stress about this for some reason i'm not sure why but that is picking a name for your llc it really doesn't matter what name you pick for your llc as long as the name is available in the state where you're going to be filing your llc it doesn't need to there now i will say each state has its own specific rules about certain things that you can and can't put in the name and so i would go to the secretary of state's office for the state where you live to make sure that that state doesn't have any quirky rules about what you can actually name your llc some states actually do have some quirky rules so you do want to check that but absent some sort of weird strange rule or regulation that says that you can't name your llc a certain thing because it's a prohibited word assuming that the name that you want is actually available then you can pretty much use whatever name you want some some common names that i see are any name that would have your own personal name in it so a lot of people just register their name as the llc you know other people they will use maybe their initials or their children's initials or some other combination of initials and letters in their name for real estate a lot of people will use you know maybe the road that the real estate is on or in a series of numbers or letters so it honestly doesn't matter you just need to come up with something that uh is unique and is is not otherwise taken in your state don't overthink this if i i will say this if you're thinking well i'm worried about a trademark or something like that later on down the road that's fine and but you can file a dba for that trademark with the llc's name uh later on and a lot of people have a number of different brands that they might sell under a single llc and so for the llc itself just come up with something that that works for you and then you can name your business and deviate from that later on like i'll give you a good example uh at the beginning of this year we filed a new llc for hart digital media llc which is my media company that now owns the youtube channel and all the revenue from the youtube channel as well as ob foundations which is my courses and membership program and also one stop legal which is my diy legal template store and so that's separate from my law firm that owns the law firm and all the legal work we do for legal clients and so uh so you'll notice heart digital media owns all those things but heart digital media is not actually the name of any of those businesses pick a name but don't overthink it i think i need a quick coffee break today i got grandfather mountain oh it's a little cold what are you gonna do all right feeling good now all right number five is you need to come up with a business address now a lot of people are just going to use their home address that's perfectly fine you can do that but i do want you to be aware for privacy reasons you might not want your home address plastered all over the internet and through the secretary of state's office where it's going to become public record so a lot of people decide to use some sort of virtual dress you can use a post office box if you'd like don't necessarily recommend that or you can use a virtual dress i will tell you a service that i recently signed up with now backdrop here i am moving to portugal in july and so i sublet my my physical office space to another group and so i had to get another address and i can't use our home address because we're moving to portugal and selling the house so i had to come up with something else and i have had a relationship with the people at earth class mail for quite some time and i signed up for one of their business packages it's about 80 bucks a month and what they're going to do for you is any mail that you receive they will scan and upload to their system and they'll hold on to that mail for 30 days and they can forward it to you they can forward it to somebody else they can accept dhl and ups packages and fedex in certain locations it depends which address you choose from them and it's a pretty cool service because now instead of worrying about my physical mail coming to me and me going up to pick it up somewhere else or having it forwarded it just goes directly to the address that i've signed up with for them and they scan everything in there's a lot of privacy involved they take that very seriously everything's under locking key they'll even deposit checks for you so if somebody were to send you a check and you need to have that deposited they will take care of that for you as well and it's very affordable like i said 80 bucks a month and if i get things from my clients that i need to send to clients i can have them forwarded directly to the clients if i if i need that i can have it forwarded to me in portugal when we live in portugal so it's pretty cool service and it allows me to have an address that's completely private from my separate home address and so i highly recommend you look into them again it's earth class mail i'll include a link down below uh that is an affiliate link if you decide to sign up i get a small commission but it's a pretty cool service and something i would recommend you look into if you're looking for a virtual address the last thing that you need to do and and then i have a bonus and before i get to this last one i do have a bonus tip for you i'm going to talk to you about that here in just a second but the last um the last one that's going to be more relevant to a lot of people is you need to pick a registered agent now a lot of people say why do i need to spend the money on this registered agent jam why can't i just use myself and my home address again there's going to be privacy concerns also a registered agent needs to be available during normal business hours monday through friday and so if you decide to take a trip or go to the grocery store or go live abroad or something else you need to have an address in the state where your llc is formed for somebody to accept service of official mail for you and this might not be a lawsuit it could be uh subpoenas if you have employees it could be tax notices it could be annual report filing notices from the state it could be all sorts of official mail that you want to make sure that you're going to receive and some of it comes via certified mail so you need to make sure somebody's going to sign for it if uh if for whatever reason you are in violation of this if you put your own name down as the registered agent and then you're not there to receive that mail then you can run into all sorts of problems you could have default judgments entered against you you could miss tax notices that cost you a lot of money there's a lot of bad things that can happen so you want to make sure that you use a corporate registered agent now this typically is going to cost you between 100 to 200 a year to use a corporate registered agent the the registered agent that i use for both my law firm as well as for heart digital media my llc is legal inc i'm gonna include a link down below you can sign up through my link there and um it's i mean it's dead simple it costs you 130 bucks or something a year to sign up through that i'm not sure what the exact fee is for that but it's not expensive and then you have peace of mind knowing that you don't have to worry that you're going to miss some sort of official piece of mail that will come to your house when you're not home also you don't need to have your mailing address or your home address out there for the whole world to see now as i mentioned before i have a bonus tip but before i get to that bonus tip i want to let you know that if you're watching this video as of may 2022 i'm going to be hosting a live three-day workshop during the first week of june and this workshop we're going to cover everything you need to know to get your llc set up the right way i'm gonna walk people through step by step everything they need to do so the goal of this workshop is to number one help you set up your llc the right way and then talk to you about all the things that you need to do and give you all the tools that you need to make sure your llc is legally protected after you've set up your llc and then also give you a good foundation as well as a checklist of things that you might need to do once you've got your llc set up and all the post llc setup tools are in place so if you're interested in learning more about that again i'll include a link down below and if you're watching this video and it's already like the end of june or july and you missed it click the link anyway because i'm going to redirect you to a waiting list and i plan on doing this workshop again in the future so check that out all right now on to the bonus tip and the bonus tip is this if you are forming an llc with a partner or multiple partners then one of the things that you need to do before you set up the llc is that you need to negotiate and draft and sign an operating agreement this is going to be a multi-member operating agreement and this is not something that i sell at my contract store this is not something that offers a free download i typically recommend that people go to a lawyer in your state to help you draft that document i practice in north carolina and florida so if you need one in north carolina or florida i'm happy to help you with that but this is something that i don't think you should handle on your own there's too many issues that get missed when you're drafting this document on your own i do recommend you pay a lawyer two three thousand dollars whatever it might cost to make sure this gets drafted up the right way and if you have two or three of you that are going into business together then you can split that cost between the three of you and it's much more affordable so i do recommend you get a multi-member llc operating agreement drafted if you have partners for your business all right if you like this video and you'd like to learn more about the legal things that you need to do to set up your business including filing llc's trademarks all those things i've set put together a short playlist right here that's going to talk to you about all the things that you need to do to legally protect your online business thank you so much for watching folks and i'll see you in the next video

Channel: Jim Hart

Views: 49,433

Keywords: limited liability company, llc, how to form an llc

Id: 0h3FtZM2PuE

Length: 16min 19sec (979 seconds)

Published: Thu May 26 2022