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hey so you know what I'd love about Florida there's no matter how cold it is in your hotel room it's always warmer when you go outside but you don't care about that today what you care about is if you're operating a sole proprietorship and how do you switch that sole proprietorship between LLC that's we're gonna talk about today so by the end of today's video you're gonna learn the seven things that you need to do when converting your sole proprietorship to an LLC hi my name is Jim Hart I'm the founding attorney here at Hawthorne law we helped make legal easy for online entrepreneurs and small business owners so you can focus on doing what you do best and that's building something that matters today I'm coming at you from Orlando Florida I'm here for a conference and we're gonna talk about the 7 condom 7 things that you need to do if you're currently operating as a sole proprietorship and you want to switch over to an LLC so most online entrepreneurs get started as a sole proprietorship and before you have any revenue or clients or products to sell it's a relatively quick easy inexpensive way to really get your business started and chances are if you're in business by yourself whether it's an online business or bricks and mortar business or whatever it is and you're just getting started and you haven't filed anything with the state or your local municipality then you're probably a sole proprietorship but at some point you're gonna decide that you do want to actually formalize your business structure and I'm gonna presume I don't like to presume anything but I will presume that's probably why you're watching this video maybe you realized that your formal side hustle is now actually a legitimate business that's making you money and so it's time to really get serious about what you're doing or maybe you watch some of my other videos and you realize that by operating as a sole proprietorship it's not necessarily the best financial move and it also could put some of your personal assets and investments at risk if your business were to ever get sued or maybe you've got a client or a brand that you're working with and they have a requirement that you actually form an LLC or some sort of business entity so that you can work with them that happens to so no matter what the reason that you're trying to form your LLC the bottom line is that it's actually a relatively painless inexpensive and easy thing to do if you know what you're doing and although there are going to be corporate formalities along the way when you're operating as an LLC there's not going to be many other changes to the way you're doing business so once you get that LLC set up and you've transferred everything over it's really there's not gonna be that much of a difference but by forming that LLC you're gonna finally be able to formally separate your business from your personal assets and you're gonna also have more flexibility in how your business is operated in text and finally and I'm sorry because I didn't mean to make this into a video about all the benefits of an LLC but there is another main benefit to forming your LLC there's actually a psychological benefit to form your LLC because once you form that LLC it gives some legitimacy to the business that you're starting to build and grow and as a business owner legitimacy is a big thing and some people actually need that motivation to really kick them in the pants and get them going in the direction that they need to go with that backdrop in mind I know some of you were gonna drop some comments and be oh yeah he rambled he didn't start until 3:30 in the video I think this is important information you need to know about so here are the seven steps that you need to follow when you're switching from your sole proprietorship over to your LLC and although these steps may vary from state to state this is going to give you a general idea of what you can expect if this is what you're trying to do all right step number one make sure your business name is available this is a biggie that a lot of people miss now you may have already filed a DBA in your state and if you did good for you because you know your name is already built but if you have not filed a DBA in your state then you need to do some research and make sure that the name that you want to use for your LLC is actually available because if it's not you're gonna waste a lot of time and money filing those articles of organization just to find out that they're gonna get rejected because the names not available and chances are they don't like to refund those filing fees which can be hefty in some states now if you are actually switching your DBA to an LLC you want to make sure to amend that DBA as well to reflect the fact that the DBA is now the name of the LLC and that might include withdrawing the DBA and just filing your LLC or they your state may have some other paperwork that they want you to file for that if you want to hire my firm to file your LLC for you will include the name search free of charge I'd step 2 is you actually have to go out and file your articles of organization or your Articles of Incorporation to form your LLC or your corporation whatever it is that you decide that you want file and our recommendation is typically that you're going to do this in the state where you actually are doing business don't form it in Nevada or Wyoming or Utah or whatever just because you think that's the best place to form LLC's it's always better to form it in your state I've got other videos about this up here so check those out in the Articles you're gonna include information like your name your business address the registered agent you're using the business purpose big bugs in Florida you can't see it but two bugs just they just flew in it must've been in here when I open the door for the outdoor shop anyway what I was saying is and you're also gonna include the information on how your LLC is gonna be managed if whether it's gonna be member manager or manager managed I'm gonna do another video about that here at Hawthorn law we actually have a DIY service that allows you to register your LLC in all 50 states and I'll include a link for that down below alright the third step is you have to draft an operating agreement I've done several videos about the major mistakes that people make when forming their LLC and one of them is that they don't actually form an operating agreement or have an operating agreement in place for their LLC this is a vital document that's going to help to maintain that separate Mis between your personal and your business assets and it's also going to keep people from being able to pierce the corporate veil if you do get sued with your business so failure to have that operating agreement in place is really a big deal and it's gonna really put your personal assets at stake in the event that you ever do get sued we include an operating agreement as part of our DIY service and I'll include the link below we also have an operating agreement template if you've already formed your LLC but you don't have an operating agreement yet I'll include a link for tha
Thanks for your comment Margarette Schleifer, have a nice day.
- Dino Tribue, Staff Member
hello and thank you for joining me for another episode of Rachel Rogers TV today I'm answering a question of a small business owner about his LLC his question is if I drastically changed the products and services of my business do I need to create a new LLC the answer is it depends let's go back to the actual formation of the LLC when you form an LLC if your state's articles of organization form ask you for a description of what your business will do try to be as general as possible you can use language like this the purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized when you write in a very specific description like design websites or big cupcakes you are in essence limiting what your company can do I can think of no good reason for most businesses to do this every company changes course at some point and a lot of times you may decide to offer new services or even go into a whole different industry when you use general language for the description a web design company could become a bakery all while using the same LLC if you didn't use general language when you formed your LLC shame on you no I'm totally kidding there is a really easy fix for this in most states all you have to do is file an amendment with the secretary of state in your state sometimes it's called a certificate of amendment you're going to use this form to change the description that you use in the articles of organization it's really straightforward and you can find out more by contacting your Secretary of State when you change the description don't forget to use general language if you decide to start conducting business under a different business name then you may also need to file a fictitious name statement with your county or your state or possible we both so that was a lot of information right let's do a quick recap use a general business description when forming your LLC if you didn't file an amendment with your secretary of state to amend the articles of organization for your LLC if you start using a different business name file a fictitious name statement in your county or state lastly don't forget to check out the rules for your stay at your Secretary of State's website there's a whole host of information there and you can find out the answers to most of your questions on that website so that's my legal tip of the week share it with your friends if you found it useful and if you have a question for me to answer here on Rachael Walker's TV just press that big blue button below and I'll be happy to answer that question for you thanks so much for watching and I'll see you next week bye bye
Thanks Rosetta your participation is very much appreciated
- Dino Tribue
About the author
I've studied hoax at Palm Beach Atlantic University in West Palm Beach and I am an expert in english studies. I usually feel enthralled. My previous job was proofreaders and copy markers I held this position for 3 years, I love talking about modeling and cartooning. Huge fan of Cheryl Ladd I practice disability sport and collect trading cards.
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