In today’s episode, we spill the tea on all things LLC. Is it the best business structure for you?
What you’ll learn:
➡️ The pros & cons of an LLC business structure
➡️ The right structure for your type of business whether you are starting or scaling your business
➡️ Legal protections you need to have in place for your business, assets and profits.
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Legal Disclaimer: Although Mariam Tsaturyan is a licensed attorney, she is not your attorney. Any information, tips, or materials in these podcast episodes are for educational and informational purposes only. No attorney-client privilege or relationship is established by your subscribing, downloading, or listening to any of Not So Risky Business podcast episodes. The information shared in the Not So Risky Business podcast episodes is not intended to be legal advice and should not be construed as such or as a substitute for getting legal advice from your attorney. If you need specific legal advice, consult with your attorney.
Is having an LLC enough to protect you and your business from other legal headaches. The answer to this will be covered in today's episode. Welcome back. The reason I'm doing this episode is because lately I've been receiving a lot of emails and social media messages, DMS. Asking me since they have an LLC.
Or a corporation set up. Do they need anything else? Isn't it enough for their businesses legal protection? Now as much as I love forming an LLC or being a corporation for your business. Because yes, those are the best types of business structures to have when you're trying to protect yourself and your assets.
Having an LLC, unfortunately, is not the answer to all your legal problems. This is what I want to discuss today. I want you to clearly understand what LLC or corporation is for, what they protect and where they have shortcomings where you will need other legal protections in place. Moreover, there are all kinds of legal protections that are used for different purposes.
These things that we do for our businesses does legal precautions that we take. Or sometimes it's not a precaution. It's actually a reactive step that we need to take in order to protect our business or assets or profits, are necessary because they are meant to protect different aspects of your business, different moving parts of your business. Not one thing does everything.
I lately I have been talking a lot about a program that I'm launching. In fact, I'm going to do a challenge for this program where, you know, my audience will go through several days of live challenge training with me. We'll take some actions to make sure that we are all protecting our businesses, our assets, our profits.
And what's even more important, that we can scale legally. This means that we need to make sure that our building blocks are protected. Our foundation is strong so that as we build on top of it for our business purposes, as we scale, our scaling itself has done legally and without any legal headaches. So my challenge will cover all of this, but because of, you know, I have been talking about this challenge a lot lately on social media, I have been getting these types of questions, I have an LLC isn't that enough, or I have a corporation. I am protected. I don't need to do anything else. Now, these are misconceptions or myths, I should say. When it comes to legal protection and your business. Let's talk about LLCs, what they protect, what they are for. So that you understand where you need to be at in your business for legal protection purposes. If you're a coach or creator or an online business owner.
An LLC is a business structure. It's a sort of a tax designation as well because IRS doesn't really treat LLCs as business structures. But, it is one. LLC stands for limited liability company. Almost every single jurisdiction in the United States has an LLC that you can form for your business. In fact, this tends to be the most flexible form of business.
Therefore, we see a lot of LLCs out there. Is it the best business structure for every single person? Probably not. There are some things that come into play depending on your situation, depending on your business goals, how many people there are running that particular business. Where something like a corporation might be a better option.
But LLC works for the majority of people and businesses out there. One of the main attractiveness, the main attractive points of LLCs is that they offer you that limited liability protection. This means that you, as the person behind the business, the owner, the individual, your assets, your personal assets will be protected. Should something go wrong in your business? And your business gets sued. Let's say your business acquires a lot of business debt.
Or it's being sued and it has a judgment against it. If you have an LLC, and if you've done everything correctly, meaning you didn't reach in your LLC pockets and take money out. You didn't Pierce that protective veil, then your LLC assets only will be liable or, we'll have to cover whatever costs.
Your personal assets, no matter how much of it you have, you might have million dollars in your personal savings account. Those will not be touched. So this is one of the main attractions of LLCs. They're easy to form super flexible, and they offer you that limited liability protection and they come with less formalities.
As opposed to something like corporations. But LLCs protect, give you that limited liability protection and they separate the individual, the person, from the business, meaning it separates the two entities, it creates two separate entities. Whereas the business is an entity on its own and the individual running the business is an entity on their own.
LLCs do not protect you from other legal mishaps. For example, LLC will not protect you when you have an intellectual property, infringement issue or a legal dilemma, whether you infringe somebody else's intellectual property or somebody else infringed your intellectual property, an LLC will not offer you protection against that because it's not meant for that purpose.
If we're talking about intellectual property issues, well, then you need to consider things such as trademark registrations, copyright protections, copyright registrations. Licensing agreements, contracts. Right. These are the things that will protect you against IP related issues. If, for example, you have the kind of business where you have people visiting you. In person or you do, let's say in person events, you do summits, speaking events, something like that. Somebody comes and gets hurt during your event, then your LLC will protect you In a sense that if that person sues you, they will be suing your business. Not you personally.
But an LLC will not do the job completely because you still need to have things in place such as premises liability or general liability insurance or something like that. To actually take care of the costs. So as you see, at every stage of your business, you would need the different kinds of protections in place.
Legal protection is not a one size fit all type of an approach. If you're a very small or beginner business, you have different kinds of issues that you need to worry about that you need to protect. When you grow, expand, scale, all kinds of different things coming to play that you need to protect.
For example, if you're growing and you're hiring people, whether they're contractors or your first employee. Well, an LLC will not protect you against everything. You need to make sure that your business, your assets, your policies are both protected. abided and complied with. This means you need to have things such as employee agreement in place. You need to have employment policies.
In your office or on your website. So that for example, your employee is aware of what kind of policy you have for the Workday, when do you expect them to start work? What type of work you expect them to do? If they get any sick payday, if they get any vacation time, if you know, they get any personal time off, paid, personal time off any, and all of that.
If you're hiring independent contractors, freelancers or virtual assistants, let's say, then you would need agreements and policies in place such as an independent contractor agreement, most likely and NDA or non-disclosure agreement also known as confidentiality agreement to protect your.
Specific business processes, your business assets, your client list, your methods for doing particular things. And your secret sauce of your business, you know, your trade secrets. If you have any. So an LLC will not do any of that. You need to have all those different agreements in place. They need to be airtight.
Because you need to account for all the potential situations and scenarios that could potentially go wrong. I know I say potentially a lot, but in law and when it comes to your legal protections, you have to be almost little bit of a psychic, you know, in quotation marks, because you do have to predict what are some things that could potentially go wrong.
And this type of a situation. And make sure that you include that situation in your agreement, because if you're not protected against those in the future. Your agreements are not good enough. This is why when it comes to contracts, when it comes to policies, terms and conditions or any kind of employment agreements, contractor, agreements, NDAs. I always advocate for people to go over their policies and agreements at least once a year.
Ideally, you want to do this twice a year, every six months, go over your agreements, go over your policies, review them. If something has changed, make sure you add that in your contract or agreement. If you let's say came across a party, a particular situation as you were working, or as you were doing your business that you didn't even think about before at that particular situation to your agreement or contract so that you are protected in.
In the future against something similar happening to you again. So, this is why when it comes to legal protections, we have all these different blocks that we need to worry about and we need to have in place building on top of each other to provide you, your business, your assets, your profits, most importantly.
Which the protection and the ability to scale without the legal headaches, because while having an LLC is great, it's amazing. It's something I recommend for most of my clients to do. When I'm working, one-on-one in my law firm or, you know, when I'm working in my legal coaching business at Mariam Tsaturyan LLC. Having an LLC is something I highly recommend to people no matter how they decide to work with me. But just having an LLC is not enough. You need all of the above that I have mentioned such as intellectual property protections, contracts, agreements, policies, insurance.
In order to get that complete protection and legal compliance. There are all kinds of other things when it comes to legal compliance and protections that come into play as you grow as well. For example, you start working with influencers or ambassadors then, if you run paid ads,
There are more guidelines that you need to be aware of and comply with in order to get that full protection. You need to abide by FTC guidelines, which is the federal trade commission. You need to comply with cam spam regulations. You need to have airtight agreements with your ambassadors or and or any influencer that you work with in order to enjoy legal protection. And not have to worry about any potential headache stuck to that could come into play. So, yes, my friend, go ahead and file your LLC. Operate as an LLC, if that's something that makes sense for your type of business. But just know that LLC alone does not protect against everything.
LLC has a particular business purpose. It serves a particular purpose in your business. Which is to provide you with that limited liability protection and separate your person from your business person, make them into two separate entities. But LLC does not protect against infringement issues for intellectual property, for contractual breaches, for hiring somebody, for firing somebody, for protecting your confidential information, your licensing agreements, and much more. So I have several episodes that talk about different aspects of legal protections that you would require as a coach or a creative. Make sure to go back and listen to those episodes. I have one on email marketing.
I have one on, what you would need to start a coaching business. So make sure to review those. And if you have any questions on this topic, Go ahead and send me an email or leave me a comment on my website and I'll get back to you. As always, if you have any topics that you want me to cover? Feel free to suggest those and I'll do my best to create an entire podcast episode around that.
[00:15:10] Until next week.