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My personal general rule is once you take money for the product/service you should form the LLC, e.g. money should be deposited into a business account not your
by davismwfl 7y ago
My personal general rule is once you take money for the product/service you should form the LLC, e.g. money should be deposited into a business account not your personal account.
I didn't always have that rule, I used to do a few deals first and put the money in a separate personal account with maybe a DBA under my name at most (many times without that) then if things were looking good I'd move forward -- this is a good way to test. But with the way the U.S. is and how litigious everyone is, the small price to gain a little extra buffer in the form of the LLC is not worth delaying. Part of this will depend on the value of the product/service and who it is serving. But basically, if you take money and something happens you could personally become liable for it if you took the money personally. If you are 25 and have no responsibilities or assets then that's probably not a big deal. If you are 40 have a family, kids, house, assets etc the math changes. So it is really up to you on risk aversion.
- rajacombinator 7y agoThanks, that makes sense. Here’s another related question: do you need a separate LLC for every MVP-level product or can they all be rolled into one? (Along with personal consulting work perhaps?)
- davismwfl 7y agoSo I have been advised in the past (by my attorney) to do it all out of one LLC (file d/b/a's if needed for marketing) and if you get one product that is a hit then you can isolate it from the others if you want later (but that really isn't required in most cases). But for sure, you don't need multiple LLC's just for multiple MVPs and consulting. I maintain one LLC that I do occasional consulting out of and it also owns many of my business based investments, which includes stock and in a couple of cases units in other LLCs.