Around 5:30 I'm starting to wonder when there's actually going to be content. The 5 mistakes actually start around 7:00 Regarding the question of improperly spending funds, I'll highly recommend Mike Michalowicz's book Profit First, which has some guidelines on what's basically the envelope method for dividing your company's revenue. Starting out, it's likely 1% profit (because if the biz can get by on 100% it can do it on 99% as well), 15% Tax, 50% Owner Compensation, 34% Operating Expenses but this will vary.
The information he provided prior to the most common mistakes is just as important. Especially for those who are new to this. Perhaps he should start putting timestamps in the description box for those with ADD and those who want to dictate what is and isn't pertinent "content".
As someone who has made many of the mistakes you've mentioned due to starting businesses from flat broke (and homeless at times), I appreciate the information. Most recently, after 3-1/2 years of being a SM LLC, I'm finally fixing my mess, was blessed with an accountant willing to work with me to make sure I fix the mess, and see a tiny light at the end of the tunnel. I can say from experience (and multiple thousands of dollars of IRS penalties from forming a Partnership without understanding the legal requirements) that if you don't do "due diligence" to learn the rules to play by in advance, your failure to do so will come back to bite you big time. Ignorance is not an acceptable excuse when you're sitting across from the IRS Revenue Agent, and they don't care how little money you have to pay their bill. Don't make the mistakes I've made!
- Co-Mingling Funds - Operating Agreement in place - Proper Corporate Records - Sufficient Capitalization to cover payables/debts - Using for personal expenses - Business Insurance - Concealing/Misrepresenting Ownership
First off, big thank you to James Hart / Hawthorn Law for putting out this free and very useful video tutorial... And now what you are here for: 1) 7:05 - Commingling Funds 2) 7:58 - No Corporate Records 3) 9:15 - Inadequate Capitalization 4) 10:40 - Raiding LLC Bank Accounts 5) 11:40 - Not Having Adequate Liability Insurance 6) 12:30 - Misrepresenting Ownership of LLC you are welcomed
People like you that do this, don't understand how RU-vid works. You are literally *kneecapping the earnings* of the content creator you're claiming to thank.
Great video...I discovered you today and have been binging your videos. Regarding meeting minutes, should I keep minutes even if I am completely by myself? I guess this would be more like a journal of my decisions and why I made them.
also watched your manager member versus member video. so helpful if a side-by-side comparison of both options were included to cover pros and cons. thanks for sharing.
I currently run two different businesses and both use Hiscox. Hiscox offers targeted insurance policies for virtually EVERY kind of company and they're incredibly affordable. My primary company offers communications services and needs a $2 million professional and general liability policy. Hiscox provides my LLC coverage for under $70/mo. There are other providers out there and I'm no business consultant, but I've been very happy with Hiscox. Good luck!
Thanks for this informative video. I started my business before forming an LLC so, I put my revenue into my personal account for the first 3 months. Once I formed the LLC, I moved the money from my personal accounts to the business account.
Perfect timing! Was just thinking if going thru legal zoom or some other service& wondering if it is ok for a side hustle. Now I have a clearer idea of what is needed.👍🙂
So what if you formed an LLC years ago but may have been using the Business Account for both business and personal bills (classifying each personal use as a "member draw")? If that is comingling, is it possible to "cure" that? Cheers.
Thanks for this great video! I have a question about keeping personal and business finances separated. I have a checking account and savings account in the name of my LLC, but right now I am using a credit card that is in my name. I only use that card for business expenses. Would that put me at risk of a lawsuit piercing the corporate veil? If it is ok to use a credit card in my name, do I need to pay the credit card bills from my own checking account and then reimburse myself? Thanks again for making these videos.
so what actually is improper capitalization of an llc, you've said this several times in vids, but i cant find a proper explanation of what is and isnt improper
Sounds like it depends on the amount of debts you have. If you don’t have any, I’d keep just enough to make sure you can pay your taxes and any filing fees and such each year
what if someone wants to extend their business to do completely different things under different brands, if you should not form multiple LLCs? how to expand your business and go beyond your initial niche?
Are there companies you can hire to setup the LLC properly and then pay them an annual fee to make sure all the regularly required paperwork is filed each year? Like I know there are certain forms and what not that need to be submitted to the state/country every year. I want things to be as hands off as possible, even if I have to pay for it.
Really looking forward to your future video on intellectual property rights! There are so many artists who want to start a business, but there are a lot of questions around selling your intellectual property through an LLC.
I'm just a fan of yours and heard a broadcast of Doggie Diamond on RU-vid last night getting pretty deep. WATCHING you today. . WELL enjoy your day my friend. I text slow.
If a company pays there employees in the form of a check from a bank like for example (community 1st ) or bank of America) isn't that illegal because it should be in the form of a paycheck with a paystub. Right !!!!!!
I don’t understand 3:20 “what if you mrs up your LLC” how can you mess up your LLC? All you do is fill the form out with your information , right? How can you fill out the form incorrectly? It’s just all your information.. I’m nervous now.. can Someone comment to help me understand how can you mess up your LLC
It was unclear why we need an Insurance policy if the purpose of an LLC was already to protect us from personal liability. If we are already protected by law, what is purpose of policy? I’m not trying to avoid it, just trying to understand. Thx
I'm creating a crypto that is a charity, but need to divert a marketing budget to purchase adspace/billboards etc. I was thinking, I would start an single member LLC. to handle all of this myself so that no one can get corrupted by the money.. does it sound right?
I have a question about the Texas Franchise Public Information report. I want to use a virtual address and use a registered agent, but this single annual form seems like it destroys everything. That the virtual address and registered agent accomplishes so that my personal information isn’t public. Please help me understand
Video starts at 7:03. You’re welcome. Intro is way too long and if people don’t know what a “single member llc” is then they should watch a video on that first before learning bout any mistakes they could make.
I have watched many of your videos & you have helped me substantially in launching my LLC & in the near future I hope I can hire you to be my legal representation.
Everything I talk about for online business is directly applicable to physical businesses as well, with the exception that you may have local rules and regulations that you would need to follow. Check with a lawyer in that state up north. ;) #gobucks
I never got bored watching your channel. You've got sense of humor and you may not even aware of it lol. Thanks for sharing your knowledge Atty. Great video content!
If I ordered a laptop for my business but I used wife's debit card because that was saved to the Walmart account and it was a black Friday deal... am I screwed?
Funny thing is I just read some blogs that advised on how to form multiple LLCs (one being the parent to the others) as a way to keep owner's name secret/private. I'm not sure if this is the same thing that was mentioned in as #6 tip. I just remember that I was overwhelmed with the info I was getting for JUST ONE company, yet here I was running into articles about opening and maintaining multiple LLCs. Hahaha. Oh man!!
Thank you for the information. The city I live in just informed me I need a business license to rent out my primary residence. So I will be creating an LLC. I am guessing that I would not want the property listed as an asset of the LLC. Correct? Thanks again!
Thank you so much! You are a wealth of knowledge so someone like myself who is starting as a small business owner and trying to do this on my own to save a buck. Greatly appreciate your videos...keep them coming :)
Thank you for taking the time to give free advice. I appreciate all you have to say. As a new AMZ Seller I just opened a "Close LLC" in WY (from Texas). As the only member how do I cover meeting minutes? I do have conversations in my head... write those down? Is there an official format needed for the "meeting minutes"? thx do you live in a log cabin?
You do the minutes as if you are having a meeting with yourself, and what was discussed. Exp: Title [Meeting of Minutes of "company full name" LLC] Participants present: Yourself, (plus any other member if applicable) CALL TO ORDER: This meeting was called to order by (name yourself) at (give date and time) in response to a business need....(list why the meeting was held, ex: buying a laptop, or rental property etc) Approval: The above order was unanimously approved by the attendees of "company full name" LLC and finalized on (date, and time meeting ended)
Adorable cup "Da-Do"! Question: So how would I maintain privacy and personal protection when structuring an LLC or sole proprietorship? Recently a cyber bully connected my LLC to me and defamed my personal name and business name access the web. Would an anonymous LLC work? If not, what could a small business owner do to protect themselves from this?
Hi. I'm a CA licensed insurance agent. I have two separate professional designation so I would say I am qualified to answer this question only in my state as insurance laws vary by state. You should look into in insurance policy known as a "BOP" which stands for Business Owners Policy. Its generally very cost effective and typically is General Liability and Property coverage in one policy. You can also ask for Professional liability to be included. If people are ingesting your product you are open for liability thus should purchase coverage. I suggest you visit a local agent in your area so they can get into the weeds of your situation and give a more appropriate suggestion. Insurance agents are bound by ethical state laws so we are not allowed to sell someone something they don't need. You need an insurance agent that's honest with you. Good luck!!
I'm setting up an LLC for a new online business I'm starting. I also get paid commissions from a couple of other businesses. Can I run all of it thru my new LLC or do I need to set up separate entities for each income stream?
This video really helped me and pointed me in the right direction! I've heard of piercing the corp veil, but now I know what that means. Thanks for sharing!
I have a question. My LLC is not making any money at moment, but I do have business expenses which I'm paying from my pocket. Would it be a problem if I were to open a business credit card to put my expenses in and pay the biz CC with my personal bank acct? Currently, I've been paying for my biz expenses using my personal bank acct. Do you have some suggestions? Thank you. :)
👋 Here's a question RE #6. Given today's climate, say that a podcaster / youtuber / independent journalist covers content that is now considered unpopular or controversial. What if their goal is to still to conduct business but also conceal their identity as a means of protecting themselves from financial attacks, political attacks, physical attacks (i.e. doxing and SWATing), etc.?
Yes, absolutely. Here is a link for a phone consult: www.hawthornlaw.net/consult Or, you can click here to go to my fees page and sign up to start your LLC: www.hawthornlaw.net/fees Thanks!
YOUR BUSINESS FILING HAS BEEN REJECTED FOR THE FOLLOWING REASON : Formation - LLC - Organizer: The entity cannot be its own organizer. The requested business name was entered in the ‘ORGANIZER INFORMATION’ section. The organizer may be an individual or another entity. THANKS Jim! I feel very accomplished that I already knew all the don'ts in this video from watching your others! One issue I am having is listing the organizer for my single-member LLC: DO I ... A) bite the bullet and list myself as the organizer risking my personal address out on the internet B) list my registered agent as the organizer, but ensure to sign the bottom of the Article of Organization with my name and as 'member' note: i was told that banks prefer the owner of the LLC to be on the Article of Organization, which kinda forces you to 'make' your personal info public... :( pls help!
I’m wondering if you could do a video about PLLC‘s. Professional LLCs. I’m creating one. I’m also creating a separate LLC. It’s a bit harder to find information about PLLCs. I have professional liability insurance that covers me for the professions I will be working in under the PLLC. But I don’t know much about liability protection other than it’s not the same as with an LLC. Would love to have a video on this. Thank you for all your great videos!
I have a question. . . . .Why is it that a Multi-Member-LLC and an S-Corp is not classified as a "Disregarded Entity" when in both cases, like in a Single-Member-LLC, business profits and losses are "passed through" to the owner, and the business entities itself are NOT taxed ? . . . . Shouldn't a Multi-Member-LLC and an S-Corp also be considered as "Disregarded Entities" because of this ? . . . . Please explain. Would greatly appreciate it.
I'm about to create an LLC in Wyoming and I will be the only one owner and only one member of this LLC. So should I add myself as a Manager and also as a Member? Does it changes anything or should I just leave these parts since I'm going to be only one owner, manager and member of this LLC? Could you please answer? Thanks for video.
I’m an earlier podcast, you recommended no LLC if you don’t have revenues, low risk business and no assets to protect. I have lots of assists to protect but I’m just starting the business and it’s low risk.
Hello! Can you tell me how can I found out who is behind an LLC? I need this because I am the victim of a mentoring scammer who has LLC in Delaware, US and he reffered me a supplyer and I paid this supplyer 9000 usd but my products never arrived to amazon. My believe is that the supplyer doesn't exist and the mentor is the same with the supplyer. Please tell me if you can help with this information. Thank you.
Sir, on your "mistake #4" you mentioned if you wanted to pay rent, write yourself a check and do that 'bill paying' out of your personal account. My question is: I am eventually going to be paying rent and utilities for running my business out of a garage that is not mine. I was going to write the owner of that garage a check out of the business account. This is correct? Or I should pay myself first, then pay the garage owner from my personal account?? Thank you for your response and for your efforts to support small business owners (like me) who generally am learning on the fly. Kat
I got a but confused in the commingling funds. I understand having a separate business bank account to put earnings from the business into the business account, but I don't understand the vice versa when you said "putting in personal pay checks to the business account". Would those paychecks be from other payments not dealing with your business, for example if someone payed you to house sit (which isnt part of your LLC)
commingling funds ~> What is a no-no here above & beyond using your biz account to fund rent/mortgage? articles of org ~> how much scrutiny do you need to give to one thats prefab'd? inadequate capitalization ~> Is there a rule of thumb to follow for capitalization prior to pulling distributions?
I was confused by the statement about "meeting minutes". Single member LLC, who do I meet with? :) Did I hear you don't need an operating agreement for a single member LLC?
What if we use our Business Credit card to pay some expenses, like rent or phone bills for our home based business. In addition, what if we didn’t use our business checking account to pay off the business credit card expenses described. But, we paid those credit card expenses from our personal checking account? Would this be considered coo-mingling of funds ?
