Why the LLC Is Probably Backwards for You
Module: Do You Even Need an LLC?
Here's the thing nobody tells you: everybody wants to form an LLC before anything else, because it's the part that feels like a real business. You get a document. You get a little seal you can put on stuff. It feels official, in a way a spreadsheet never will.
I think that's backwards.
You've already got your separate bank account by this point in the course, if you've been keeping up. That account is doing most of the heavy lifting for you right now. An LLC doesn't track your costs, doesn't tell you what to charge, and doesn't stop you from mixing up grocery money with rent money at ten at night. It's a legal structure. It matters, eventually, for some people. It is not the first domino.
What an LLC actually does
Strip away the mystique and an LLC is mostly about two things: liability protection and how you get taxed. If someone sues your business, an LLC is supposed to put a wall between that lawsuit and your personal house and car. That's the real reason people form them. It's not about looking legitimate to your neighbors — a laminated form doesn't make your cinnamon rolls sell better.
So the question isn't "do I want to look official." The question is "how much actual risk am I carrying right now." For a lot of people testing something on weekends, that risk is genuinely low. If you're selling banana bread at a ward party or doing lawn care for three neighbors, your exposure is different than if you're driving a catering van full of chafing dishes down the freeway with somebody else's wedding cake in the back.
When it starts to matter
I'll walk through the honest version of this, not the scary version:
- You've got real income coming in regularly, not just the occasional gig. Once money is a monthly thing instead of an every-few-months thing, it's worth a second look.
- You've got physical risk. Anything involving food, tools, vehicles, or people's property carries more exposure than, say, tutoring at your kitchen table.
- You've got employees or contractors, even informally. The minute someone else works for you, the stakes go up.
- You're renting a space, signing contracts, or buying equipment under the business name. Contracts are where liability gets real.
If none of that describes you yet, you're probably fine running as a sole proprietor with your separate account and good records. That's not me being lazy about the advice. That's me telling you the truth instead of the thing that sounds responsible.
The part that actually took forty minutes
Here's anecdote number five, and I tell this one on myself a lot, because it's a good example of building something up in my head way past what it actually was.
I ran my catering business for two years without a business license. Not an LLC — just the basic city business license, the thing that says "yes, this person is legally operating here." I knew I probably needed one. I kept not dealing with it, because in my head it was this enormous process. Forms. Fees. Maybe an inspection. Some bureaucratic wall I'd have to climb.
Finally sat down one night after Jami went to bed and just did it. The whole thing took forty minutes online. Cost me less than we'd spent on dinner out that same week. I remember sitting there afterward feeling almost annoyed at myself — I'd been avoiding a curb like it was a wall.
An LLC filing in Utah is a similar shape. It's a form through the state's business registration site, a filing fee, and some ongoing small paperwork to keep it active every year. It's not nothing, but it's not the mountain most people picture either. If and when you decide you need one, don't let the idea of it stop you longer than the actual task would take.
What I'd do in your shoes
Get the separate account first, if you haven't. Track your real costs, gas and your own hours included, so you actually know if this thing makes money. Once you've got a few months of real numbers and you can see the shape of your risk — regular income, physical exposure, contracts, people working for you — that's when an LLC conversation is worth having, ideally with someone who actually does this for a living. I am not that person. I'm a caterer who read a lot at his kitchen table and asked a guy at church some questions.
The state's business registration site has the actual current fees and steps, and if your situation involves real liability — a commercial kitchen, a vehicle, employees — it's worth twenty minutes with a lawyer or accountant who can look at your specific situation. That's not me passing the buck. That's me being honest about where my expertise runs out.
Before next time
Take a look at what you're actually doing right now — the frequency, the risk, whether anyone else is involved — and just notice which category you're in. You don't have to decide anything yet. Just notice.