Are you trying to figure out – should I start an LLC for my side hustle? In short, Yes! The cost of getting an LLC in most states is relatively low. You’ll have a higher chance of succeeding with the side hustle, so investing in the LLC will pay for itself.
We’ll answer questions like when do you need an LLC and cover advantages such as increased chance of a bank loan, better money management, potentially lower taxes, and liability protection. 93% of working Americans have a side hustle. If you’re part of the statistic and don’t have an LLC, read on to find out why registering one should be your next step.
The Advantages Of an LLC for Side Hustle Work
The amazing benefits of an LLC can improve the success of your side hustle and potentially turn into a business that can replace your regular job. Registering an LLC can improve the chances of succeeding with any side hustle.
Increased Chance for a Bank Loan
A lack of funding can be one of the biggest hurdles to starting or scaling your side hustle – whether it’s buying products for an Amazon FBA business or retail arbitrage. However, with an LLC, your chances of getting a bank loan are increased. That’s because banks want to get their money back on the investment. When they see a business registered as an LLC, it gives them a vote of confidence.
Liability Protection
For any type of side hustle, there is an endless number of things for which you could potentially face legal action. For example, let’s say that you’re selling gym equipment through Amazon as part of an FBA business. A customer may injure themselves and decide to get a lawyer to pursue legal action against your business.
If you had an LLC, it would be this entity that is liable for legal action. Hence, it can protect you from personal liability that could potentially lead to bankruptcy. The liability protection reduces the stress and complications of starting a side hustle.
Lower Taxes
In most cases, registering your side hustle as an LLC may lead to paying lower taxes. This gives you more funds to reinvest in the venture. Also, you can get tax deductions such as:
- Meal expenses and business travel.
- Any equipment that’s required to run the business, such as office supplies, materials, and computers.
- Home office deductions.
- Insurance premiums.
We recommend that you seek the professional advice of a tax accountant or lawyer to fully understand the LLC tax benefits in your state.
Separate Business and Personal Finances
It’s important to separate your business and personal finances to organize your funds. It will help you organize tax write-offs, deductions, and view the amount of funds you have to invest. Also, you can give business partners access to the business account for transparency.
Also, you can sign up for a business account, which offers a wide range of benefits. It can include a dedicated account manager, higher bank loans, and a business credit card.
Legitimacy and Credibility
Customers are now smarter than ever before, which means they are likely to do background research on a company before buying. When researching your side hustle, you’ll get a big tick in the positive column if they see a registered LLC.
Likewise, suppliers want to do business with professional companies. Hence, you may find more success with the top suppliers in your niche. Also, you may have an easier time negotiating the rates and terms you want.
Top Step for Registering an LLC for Your Side Hustle
Now let’s consider the steps you need to take to register your side hustle as an LLC. You’ll see that the process is easy and doesn’t take much time:
- Choose a name: Start by choosing a name for your LLC. Make sure that it’s not already taken or sounds similar to another LLC in your desired state.
- Articles of Organization: Complete the Articles of Organization for the states in which you want to register the LLC. This is the paperwork required to apply for an LLC, and there’s a filing fee that varies for each state.
- Registered Agent: Next, you’ll need to get a registered agent. This is an individual or organization with the license to work in the state where you’re getting an LLC. Take advantage of the services here at Business Anywhere for a professional registered agent service.
Should I Get an LLC Before Starting a Business
There’s no strict rule that says you need to register an LLC before starting a side hustle. In fact, you may want to focus on getting your first sale or income steam to ensure your side hustle works. However, once you can see that the side hustle will work as a long-term project, then your next action should be to invest in an LLC.
Are you wondering – “do I need a business license for side work.” You typically need a business license to run a side hustle, and the specific laws vary based on your state. However, if you’re just starting out and not making any money, then you shouldn’t worry about business licenses. Once the money starts to roll in, then shift your focus to making sure that it’s legal.
LLC for Gig Work Final Thoughts
To conclude, getting an LLC for gig work is a no-brainer. The benefits outlined in this article are worth the investment of time and money. Anything that can be used to increase your chances of success for the side hustle must be explored.
Are you worried that registering an LLC is too complicated or confusing? Then use the services here at Business Anywhere. We specialize in helping all types of business ventures register an LLC. Our services help you at every step at competitive prices. So what are you waiting for? Sign up for our business registration services to get started.
