A Friday Chat About LLCs
NICOLE: Happy Friday!
TERRIE: Happy Friday, Nicole and Billfolders!
NICOLE: What’s on your mind as we approach this weekend?
TERRIE: I decided a few weeks ago I wanted to start an Etsy business selling [thing] that other shops also sell, but with a fandom bent — Hogwarts house colors, etc. So that’s been taking up most of my brain space lately.
NICOLE: I love fandom Etsy shops! Sometimes I browse my favorite fandoms just to see what people are offering.
TERRIE: Exactly! No one offers this thing with a geeky bent, so I was like, “This is totally a market!” My best friend has an Etsy business, and a coworker has a crafty business not on Etsy, so I wanted to see if I could have some success in that arena too.
But then… thoughts happened. Or rather, anxiety happened, causing me to overthink things.
NICOLE: Yep, I am familiar with that as well.
TERRIE: I love making my product and it’s very calming, but it relies on a third-party electronic product that I can’t warranty or otherwise guarantee. I was having horrible thoughts of this product — from a very good brand, one I use personally — melting someone’s phone or setting their house on fire.
How likely is that? Not very. But I do not need my shiny new LLC (yes, I started an LLC for this, on the advice of the coworker) to be the subject of a lawsuit.
NICOLE: An LLC is a good idea. Also, I am sure people are going to try and guess what you’re making, so I’m going to go ahead and assume it’s “Hogwarts House Hoverboards.”
TERRIE: OOH, YES. I don’t know why I’m being coy about it — that’s how anxious I made myself. It’s USB charger cables wrapped in knotted embroidery floss. Other people sell them in very pretty colors, but no one really focuses on non-Apple devices or does themed colors like I wanted to do.
So after a LOT of thinking, I’ve decided to hold off on the Etsy aspect and just do a friends-and-family, word-of-mouth hobby/business.
NICOLE: Got it. Friends and family sounds like a great idea, and it’l be a good way to test your idea and its marketability/profitability before you decide whether you want to do Etsy, table at conventions, etc.
Also you could probably talk to a lawyer about drafting some TOC language like “we hold no responsibility for the USB cables, by purchasing this product you agree not to sue if the cable sets your house on fire.” Can’t people put just about anything into TOCs these days?
TERRIE: Ooh, that’s a great idea, I’ll have to look into it! I’ll get a quote for business liability insurance at the very least.
NICOLE: That makes sense. I don’t have business liability insurance — hadn’t even thought about it. HAHAHA now I’m anxious.
TERRIE: But The Billfold LLC can’t cause physical harm to anyone or any property. Unless someone prints out an article and uses it as kindling, it cannot destroy a building. My friends’ businesses don’t have liability insurance either, but it’s the same deal with them — they don’t sell or produce anything that could cause a safety concern.
NICOLE: What if someone goes to Adult Dance Camp because of our article about it and gets hurt? WHAT THEN?
TERRIE: THEY SHOULD GO, THAT SOUNDS AWESOME. I’m so jealous of that author, they are living their best life!
NICOLE: But you are too! Making cool things, trying new stuff, setting up an LLC… Did you use LegalZoom or another service?
TERRIE: I used a similar service, for an initial setup cost they filed all the paperwork and offered a year of registered agent service. It was a whole lot cheaper than filing everything myself and then hiring them for a year.
So I have a fully registered LLC and nothing to do with it for the moment. Do any Billfolders have ideas what I can do with a bunch of embroidery floss?
NICOLE: The Billfold bought the year of registered agenting too. That way I can go on vacation without worrying that I’ll miss an important document.
TERRIE: Yes, it was your posts about the LLC that made me think of those types of things, so they were very helpful! So I should really say I set it up on the advice of my coworker and The Billfold!
NICOLE: Also, the registered agent rule is such a bizarre one: you always have to have a person available to receive summonses and similar documents? In what world is that realistic? It’s one of those rules that creates its own industry (of registered agents for hire).
TERRIE: Agreed! We get legal paperwork at my workplace and if someone’s not here who’s qualified to accept the paperwork, the guys just have to come back. So LLCs must be held to a different standard than my employer.
NICOLE: For sure. (Don’t get me started on the whole pass-through thing.)
TERRIE: I am a little concerned that I’ve just set myself up for complications come tax time, but I’ll deal with that in the spring — if my LLC has no income and made no sales, does it really exist?
NICOLE: Yes. Go visit Reddit’s Legal Advice subreddit: it’s full of people writing in about “I opened a LLC but then didn’t start the business/didn’t sell anything, why do I still owe the state money?” I’d suggest adding a CPA to your business budget.
TERRIE: Thanks much, I will do that!
NICOLE: I’m not sure about the rules for every state, but some require annual “business fees” and stuff.
TERRIE: I will figure it out — if there’s one thing I love, it’s researching. (And that’s not even sarcastic!)
NICOLE: Me too! Research is the best and it has prompted way too many hours of internet rabbit holes. I hope your LLC goes wonderfully and your business grows at a rate you’re happy with!
TERRIE: Thank you! I’m going to enjoy a stress-free weekend and not worry about things for a few days — my brain needs a break.
NICOLE: Sounds perfect.
TERRIE: I’m a longtime reader but I’ve never commented (see above re: anxiety), so I’ll also just say that I hope you and the readers all have excellent and financially satisfying weekends. Thanks for chatting!
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