Amira Irfan is a business lawyer, blogger, and coach who helps entrepreneurs protect their businesses and make money online. She has over 10 years of legal experience and runs her own company, A Self Guru. She has some advice to help you legally protect your reselling business.
What Is An LLC?
An LLC is one of the most common business structures. It stands for a limited liability company. It’s the type of business structure that really offers you personal, limited personal liability for your business debts and obligations and an LLC can be owned by one or more people.
And some of the things about an LLC are that it’s easy to manage, it gives you that limited liability protection, and it has some tax benefits. The only negative thing about it is that you do have some paperwork that you have to take care of and you have to maintain your LLC. It’s the most easily formed business structure and is way better than sole proprietorship.
What Are The Tax Benefits?
It varies from person to person, but a tax professional could advise you on this.
Sometimes what happens is you have an LLC, but you could be taxed as an S corp to save more money on taxes, but it varies by the amount of income that your business generates, and that’s where your accountant would be the best person to kind of advise you which entity you can choose.
LLC kind of gives you that flexibility. So you could have the legal shield, but for tax purposes you could be classified as an S corp. LLCs provide a flexible structure.
As A Part-Time Reseller Do I Need An LLC?
You have to think of the LLC like a car or home insurance. You buy a car or home insurance. Why? Because you want that added peace of mind in case of anything that goes wrong like disasters or lawsuits. An LLC gives you the same legal protection.
You have to ask yourself, whatever is it that you’re doing, what stage of your business you’re at. If there is that risk that you are taking, then it’s definitely a good idea to go ahead and add that layer of legal protection to your business. This way, your personal assets, like your car, your home, your bank account, all of that are protected if something happens with the business.
It really comes down to your risk tolerance and preference.
What Does An LLC Protect You From?
If you maintain your LLC it allows you that shield of protection if someone comes after your business, but it also comes with responsibilities like maintaining a separate bank account for your LLC, not commingling your personal and your business funds. As long as you maintain that wall of separation, then the LLC allows you that limited liability protection.
How Do I Get Started With An LLC?
Filing the LLC is not as difficult as you might think, as long as you know what you’re doing. So, you will need to submit certain documents with your state, pay an annual fee, and also a filing fee.
And then you have some legal obligations to have a separate bank account, not commingle your funds, your personal and your business.
What you will have to do is you’ll have to look at your state to learn the requirements. You may have to create articles of organization. If you’re not comfortable doing those you could work with a lawyer.
You would do the draft, the articles of organization, the LLC operating agreement, which kind of makes it clear as to how your LLC is being run. Once you do all of that stuff, you can submit that document, most of the time electronically.
If I’ve Been Flipping For A While Can I Get An LLC?
Yes, you can get an LLC anytime and there is no penalty for having not previously had one. It really just depends on whenever you are ready. If you feel like you are at that point where you’re making some profit and it really makes sense for you to go ahead and get that legal protection, then go ahead and do it. There’s no right or wrong time for it.
How Do You Keep It Up-To-Date?
Once you file your LLC, you have to keep it active. You file an annual report with your state’s business filing and submit a fee every year to maintain your LLC.
Do You Have To Research LLC Names?
What you will do is that when you’re looking to start your LLC, whatever name that you want to pick, you do a search on a state level. Now this is not the same as federal trademarking. This is more like on a state level because this is a state level issue where you’re filing the LLC.
Is It Good To Do A Trademark Search Too?
It would be wise to do that, especially for a trademark. It depends what industry you’re in. You’ll have to look at the federal database. If another company has the same name as you but it’s an entirely different product — think of Dove chocolate and Dove soap — then it’s okay. They both have the name Dove, but get to operate because they are not in the same industry so there’s no infringement.
What Other Tips Should Resellers Know?
LLC is a great way to start. If you have your own website, then you would need to have legal documents on your website to make sure that your site is also legally compliant. For example, a privacy policy is legally required on your website.
You also want to have terms and conditions on your website just to kind of outline your refund exchange policies. Also, what are your website rules? Protect your intellectual property so that people don’t steal your content. You also need disclaimers, so this way you can limit your legal liability for the content that you’re publishing.
And then if you are selling on websites like eBay, then you also want to make sure that you follow their terms and conditions. Be honest and clear with your descriptions and refund policy.
Show Notes
A Self Guru YouTube: https://www.youtube.com/c/AmiraatASelfGuru
A Self Guru Website: https://aselfguru.com/
Flip It For Christmas Challenge
Appliance Flipping Course: http://applianceflipping.com/
Follow us on Instagram: https://www.instagram.com/fleamrktflipper/
Check out our FREE Workshop: https://courses.fleamarketflipper.com/flipper-university-workshop-webinar
You can find us at: https://fleamarketflipper.com/
FURTHER RESOURCES
Let Us Find High Profit Items FOR You!
FREE Workshop How To Turn Your Passion of Flipping Items Into A Profitable Reselling Business
Download These 47 Household Items To Resell TODAY!
RELATED EPISODES
Is Selling On Facebook Marketplace Still Safe In 2022?
