This transcript was generated from the episode audio and may contain minor errors.
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Welcome to Sadistle School. My name is Chris Guillebeau. A very practical question and answer for you today. I actually get a lot of questions on this topic that I can't answer because I'm not qualified. I don't give legal advice.
Can't necessarily talk about the best business structure or tax structure for your business, the decision to pursue a patent process or not, how to plan for taxes and so on. But it's tricky because a lot of people wanna know, should I form an LLC or an S-Corp or something else, or just remain as a sole proprietor? It makes perfect sense that people have these questions. So I like the way this listener framed the question. He made it easy for me because he's asking for more general advice about best practices, common experiences based on many conversations.
How might someone make this decision? So it's not so much, you know, what is best for him, but how does someone make that decision? And perhaps this can help someone else move forward if they're feeling stuck, all right? So when should I become an LLC? In this guy's case, filing an LLC in his state is expensive.
Is it worth it? And how does someone make that decision? [Music]
Hi, this is Thomas from Syracuse, and I've been listening to this show for about a year or so, and I really like this new format. I'm curious about your thoughts on when to incorporate a business. Do you think it's better to do that up front or after hitting a certain amount of clients or revenue?
My gut feeling has been to file an LLC first to keep everything organized and official, but filing an LLC in my state is pretty expensive. So I've been having some hesitations on that. Is there a common process you've noticed from speaking with side hustlers over the years? Thanks, Chris. - Hey, Thomas, what's up?
Thank you so much for listening in Syracuse. Really glad to know you're out there. Best of luck with the new project. So as I said in the introduction, I don't give legal advice, I can't basically, but I love the way you frame the question because you allowed me to give some advice. It might actually be helpful to somebody out there 'cause I know I understand why people have this question.
So perhaps just a couple of common experiences. I like thinking of it that way. You can do a lot of things as a sole proprietor. Like first and foremost, I would say looking at the history of our archives and not just that, but many, many other people I've talked to over the years featured in my books and different case studies, I would say a majority of those stories, not like a 90% majority, but at least a 50%, either start as a sole proprietorship or start and remain as that structure for a long time. So you really can do a lot of things in that structure.
You can register with the state, you can get a business bank account, you can get a business credit card. There's really not a lot of distinction in terms of your clients, your customers, your sales process, any of that. And also remember the most important thing, always, always, this is the, I guess, as I would say, the most important thing, funny how that works, focus on how you'll actually make money. That is essential because sometimes people get hung up on this stuff for so long and they don't actually have a revenue model. And you can usually incorporate later, you can even unincorporate if you feel like you did it the other way and you wanna make a different change.
But if you have no revenue model, you don't have a business. So worry about that first and foremost. Now, having said that, I use that word worry again, if you are worried about this, or if it is your gut instinct, just pay the money because it's not actually that much money. It's only a lot if you're working with a lawyer to do it. There are a lot of services now, Legal Zoom, is probably the most common one.
I believe that they have been a sponsor of the podcast in the past, but they're kind of ubiquitous. I'm sure there's some other services, you might be able to just kind of do it on your own. Just Google File LLC, New York, File LLC, Wisconsin, whatever it is. So it may be a few hundred dollars, which is not cheap, but it's also not the end of the world. So if there's a stumbling block that's holding you back, just find a way around that, do whatever is best for you.
And you may at some point wanna get some advice from someone who's more qualified than me, but again, those are some common experiences and you can do a lot as a sole proprietor, just in my experience and in many other people's as well. All right, listeners, if you got a question, whether it's a specific one or a general one, just come to sidehustleschool.com/questions. We are featuring them throughout the year, along with updates from other listeners. Thank you again so much, Thomas, and thank you listeners. So glad you're out there.
Much more is coming up. My name is Chris Guillebeau. This is Side Hustle School. [Music]
- From the Onward Project.
