- You don’t keep your personal bank account and your business bank account separate. You cannot use your personal pay pal, person Venmo, or personal checking for your business. If you ever get in trouble with the IRS, then it will be super hard to get it figured out.
- Failing to have a services contract. Even though you have the protection of limited liability through your LLC, you still need to sign a contract with your customers! Otherwise, it’s like the WILD WEST, and, trust me, you don’t want that. Just so you are clear—the LLC protects you ONLY so you aren’t PERSONALLY liable. Your business can 100% still be liable for mess ups caused by a terrible contract, no contract, or a breach of the contract.
- Not having an operating agreement in place. It is important to have an operating agreement in case things go south or even if things are going really well. Here’s why: Do you know what the people who doll out PPP loans wanna see? You guessed it…your operating agreement. SBA…yep, they, too, want your governing documents before they agree to loan you any money. Angel investors or especially the big-time investors, yep – they will want to see the rules you’ve set for running your business before they hand over penny number one. What if you start making some real money and you want to invest back into the business, but your partner wants the cold hard cash now…You guessed it, your operating agreement should light the way here. The point – have an operating agreement prepared. Yes, you, too, single member LLC!
- Not saving for taxes. If you pay yourself and don’t set aside the right amount for your taxes, it’s a problem. And, I have people coming to me with this problem years, YEARS, into operating their business and NOT having paid taxes. DON’T LET THAT BE YOU. Here’s the deets…you are supposed to pay them quarterly, and on average you should plan to set aside about 1/3 of the income that comes in for taxes.
- Signing contracts in your personal name, and not as the business. But if you are signing contracts personally, the person on the dotted line so to speak is the person who is responsible for fulfilling the contract and, unfortunately, liable for any damages. So, if I sign in my name, and things go off the rails, the plaintiff can and will come after me personally. And by “personally” I mean that the angry plaintiff and their lawyer will be gunning to collect on your personal assets, think, house, cars, bank accounts, prized possessions.
Sign your contracts like this:
WICK LAW OFFICES (COMPANY)
BY: Melissa Wick
ITS: Owner/Member, Melissa Wick
- Not getting insurance. Protection by virtue of having an LLC exists, but still the liability may be there, not for you personally, but for your business. Let’s pretend a customer sues your company, the company still must find a way to pay for the lawsuit (file an answer, engage in discovery, file too many motions to count, and have a trial, if it comes to that) And, on top of it, you may still have to pay for damages, if you are liable. The insurance may give you a lawyer, settle it out, or potentially pay some of the damages.
- Failing to manage their thinking about the business. When you start an LLC, you can que all of the unhelpful thoughts and feelings to rise to the surface and cause anxiety and fear. It’s pretty normal, actually, for your brain to do this because it is trying to keep you safe. However, if you let yourself believe the catastrophic thoughts that come up as you are doing something new, like starting a business, then, I guarantee you aren’t going to be showing up with confidence ready to rock and roll. There is a trick, and it’s knowing ahead of time that you CAN control how you think about your business, and the way you think about it WILL absolutely drive the results you see. Check out my business coaching page and look for FULL SEND.
Ok, friends, are you stoked to get some legal help with this process!? Great! I am equally as stoked to help you! Call me! 614-572-6366. Email me! email@example.com.
Wick Law, LLC is a small business legal practice, representing owners, investors, and entrepreneurs in all aspects of commercial, corporate, and business law, estate planning, contracts and negotiations, business litigation, and real estate. For more information: Contact 614-572-6366, visit www.mwicklaw.com, or email us at firstname.lastname@example.org. Wick Law, LLC is located in Columbus, Ohio.
(Materials in this article have been prepared by Wick Law, LLC for general informational purposes only. This list is for educational purposes and is not to be considered exhaustive. More items could be added to this checklist based upon the type of transaction or industry standards. These materials do not, and are not intended to, constitute legal advice. The information provided is not privileged and does not create an attorney-client relationship with Wick Law, LLC or any of the firm’s lawyers. This checklist is not an offer to represent you. You should not act, or refrain from acting, based upon any information in this checklist. Wick Law, LLC maintains offices in Columbus, Ohio, and has lawyers licensed to practice in Ohio and in the United States District Court, Southern District of Ohio. The firm does not intend to practice law in any jurisdiction where the firm is not licensed.)