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Personal Finance FAQ

Forming a LLC Does Not Mean You Have a Business

Surprised?
You mean there’s more to do?!?

There’s no business like show business, but there are several businesses like accounting.
–David Letterman

I would need to take off my shoes (and that might not even be enough) to count the number of times that I have had this conversation with people who ask me for business advice:

Me: Have you started your business?

Them: I formed a LLC!

The only folks who win when you form a LLC without a real business behind it are lawyers and the state where you filed.

Forming a LLC doesn’t mean you have a business.

It means that you have a legal entity that could conduct business.

The advice about forming a legal entity, getting a bank account, etc. are backwards.

Go get customers.

Get them to pay you for something, a service or a product.

THEN do the legal stuff.

Until then, you don’t have a business.

When you have customers and revenue, you have a business.

Before that point, you have a pipe dream.

Want to know more? Check out my interview with my former corporate counsel and M&A attorney, Patrick Asplin.

By

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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