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I have learned a lot of lessons since I started my first “company” in 2010. But one that I like to share the most with people is about timing and priority when executing an idea with no cash.
If you are starting out with little to no capital, it’s absolutely pointless to file for an LLC, pay a lawyer for problems that don’t exist yet, and then pay taxes on a company that is not even making any money. Especially if your idea is so fresh that you are still uncertain of it’s success.
Here is my approach. Start a “project” or “experiment” or whatever you want to label it as. Work on it, learn, make mistakes, learn more, keep working hard, make people like you and your project, and most importantly be patient and persistent.
With a bit of luck, your ,”project” might start making a bit of money. If this happens, YOU ARE STILL NOT A COMPANY, at least you don’t have to be. You don’t need to be. You are still under the radar.
Continue to scale your “project” until it really starts circulating some cash. Maybe around 10k or something. Maybe more, maybe less, don’t quote me. Different states have different laws. And countries… Do what you feel safe and comfortable with.
Anyways, once you get to a point where your company is circulating a good amount of cash, THEN file for an LLC, hire an accountant (important one!), and then, if absolutely necessary, get a lawyer. Depending on your situation, you may want to add or remove some of the expertise in that list.
Here is my logic on this method:
Why spend resources on things that do not immediately benefit your operation, when you are totally allowed to try it out at a small scale with no repercussions? What if you fail, or change your mind, or find that it’s a bad idea, or some other variable comes along that your new project cannot handle yet? Always make sure it’s worth it first.
When you are trying to get a “project” off the ground, you need to prioritize nearly everything you do. There is hardly any room for waste, and mistakes. There are plenty of things that are more important for your startup when at the early stages of executing an idea.
As the great William Wallace once said, “HOLD! HOLD!! HOLD!!! NOW!!!!”
Warning: Graphic images of William Wallace destroying his competition.
