BY REONNA GREEN
Women business owners are driving record levels of small-business creation, making over $1 trillion in sales and creating half of all new small businesses. Unfortunately, most small business owners' struggle with carving out time to legally protect themselves and the fact that social media platforms spread misinformation leave business owners at risk. As a trial attorney and founder of a law firm dedicated to female entrepreneurs, She Trademarks, I know firsthand the preconceived thoughts small-business owners have about the business process. Check out the three misconceptions of business formations below.
- You Must be Profitable Before Creating An LLC
I often hear from clients that business formation is put on the back burner because they believed they didn't need an LLC until profitable. However, this statement is far from the truth. Realistically, it would be best to immediately have a business entity to protect your assets from your business assets and vice versa. As a new business owner, the only way to protect your assets from the business assets is if you create a separation between yourself and your business. - LLC Formation Is Hard and Expensive
Many business owners wait to create an LLC because of the perception that it's "it's hard and expensive." However, if you are a single-member LLC, you can do the business formation process yourself, meaning you are the only owner. It's pretty straightforward and can be done online on your state's secretary of state website.
- Your Money Can Be Run Through Your Personal Bank Account
If you have an LLC and choose to run all your money through a personal bank account, you are setting yourself up for significant financial risks—this is known as commingling funds. Commingling of funds or assets is legally a breach of trust, making it hard to determine which funds and/or assets belong to your company and which ones belong to you personally.
As a new business owner, it's essential to know that these myths are inaccurate, and believing in them can put you and your business success at significant risks.
Follow SheTrademarks on Instagram for more business advice and guidance.
ABOUT REONNA GREEN
Reonna Green was a nail tech/cosmetologist before she became an attorney. As a former beauty business owner, she understands the industry from the inside. She created She Trademarks to provide women business owners the tools and resources to succeed and propel their careers.