So you have a bunch of side hustles. But one is really taking off. You enjoy doing it and it matches your lifestyle. Now what? It’s time to think about upgrading your hustle to a small business. First step, level up with an LLC.
Why should I have an LLC?
An LLC (limited liability company) is an official way of organizing your business. Having an official business comes with a few clear advantages:
- An LLC gives you access to business only resources like business bank accounts and credit cards
- An LLC protects your privacy and allows you to advertise and do business in its name instead of your own
- An LLC provides tax privacy. Your LLC will have its own tax id, called an Employer Identification Number (EIN), that you will use in place of your personal social security number on various business documents and for various business services
- An LLC gives your business a professional polish and credibility with consumers and vendors
- An LLC provides a layer of protection in case you get sued
Do I need a certain income level to start an LLC?
Don’t worry, you can start your LLC at any time. There’s no income minimum to set up an LLC. Plus, the added privacy and legal protections are worth the initial cost.
How do I get started?
Don’t pay thousands of dollars to business startup gurus. You can start your LLC yourself with a bit of time and, depending on your state, a couple hundred dollars or less.
Step one, pick a name
This part is probably the most important part of the process. Take a time and think of a name that will be durable over time. Also, consider if you will want to run multiple businesses under one LLC. Example, you want to try out several different businesses, maybe an online store, and a cleaning service to see what sticks. Select a name that is broad and will work well with both businesses – such as “Citywide Ventures”.
Make a short list of potential LLC names. Be sure to include names that are distinctive to avoid any confusion or legal trouble down the line with businesses with similar names. Don’t try and get cute and make a derivate name of a popular brand or business. If you are unlucky or become popular, you will get sued.
After you have a short list of potential names. Do a quick Google search for each name. Do you get results? Are the results of other businesses with names very similar to yours in the same or neighboring state? If so, you will want to skip that name to avoid confusion later on. Sharing a name with another company may stop you from getting the LLC registered and also cause confusion with customers and/or vendors down the line.
Get a business address
Ideally, to make the most out of the privacy an LLC offers you will want to use an address other than your home address for your LLC application. You can set up a virtual mailbox that can be used for your business address at the USPS, The UPS Store and virtual mail services like iPostal for a monthly fee. The UPS store is the most expensive option, but offers a more full-service, in-person experience. Virtual mail services like iPostal are the least expensive option and offer addresses in many states, but offer less services. I personally use iPostal and find it the best option since I receive very little physical mail.
File for your LLC
If you have a bit of time, and are savvy with bureaucracy, then you can file yourself and save money. However, I recommend using a service like LegalZoom. They make the process quick and easy. For $249 plus your state’s fees, LegalZoom will walk you through the final steps for creating your LLC, including documents needed, verifying the availability of your business name, obtaining your EIN and completing the business filings.
After completing the process, you should have your LLC in a few weeks (depending on your state).
Starting an LLC can be the next step in leveling up your side hustle into a business for future financial independence. Don’t be discouraged or intimidated! There’s a wealth of tools, tips and advice here and on the web to support you.
