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When Should You Start An LLC For Your Dropshipping Business?

Published on: November 27 2022 by Peter Pru - Ecommerce Empire Builders

When Should You Start An LLC For Your Dropshipping Business?

When Should You Start An LLC For Your Dropshipping Business?

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00:00:00 00:00:04 hey what is up empire builder so today I
00:00:02 00:00:07 got a question from you guys asking when
00:00:04 00:00:08 should you start an LLC for your drop
00:00:07 00:00:11 shipping business we're gonna answer
00:00:08 00:00:11 that question right now
00:00:13 00:00:17 so today's question came from you guys
00:00:15 00:00:20 and it was such a good question guys
00:00:17 00:00:21 asking me when should you start an LLC
00:00:20 00:00:23 for your drop shipping business is it
00:00:21 00:00:26 worth it when should you start one and
00:00:23 00:00:27 how to know the legality side of things
00:00:26 00:00:30 now before we get into today's video I
00:00:27 00:00:31 just want to welcome everybody that's
00:00:30 00:00:33 brand new here to the Empire Builder
00:00:31 00:00:34 family make sure you subscribe make sure
00:00:33 00:00:36 you like the video and drop a comment
00:00:34 00:00:37 down below I always make some time to
00:00:36 00:00:39 answer your questions
00:00:37 00:00:42 down below but we release new videos
00:00:39 00:00:44 here ecommerce early videos every single
00:00:42 00:00:47 day and make sure you also check out all
00:00:44 00:00:48 the free resources and bonuses and
00:00:47 00:00:50 training materials down in the
00:00:48 00:00:52 description of this video but guys
00:00:50 00:00:54 today's video I want to specifically
00:00:52 00:00:57 tok about LLC formations for your drop
00:00:54 00:00:59 shipping business how to do it and when
00:00:57 00:01:02 should you do it if ever should you do
00:00:59 00:01:03 it so before we get started here guys is
00:01:02 00:01:06 I just don't let you know like this is
00:01:03 00:01:07 not legal advice I'm legally not allowed
00:01:06 00:01:11 to give you advice I can only give you
00:01:07 00:01:13 what I did for my businesses and that's
00:01:11 00:01:16 it okay so this is not legal advice by
00:01:13 00:01:18 in any way shape or form please go seek
00:01:16 00:01:21 an attorney or somebody certified that
00:01:18 00:01:22 can give you better advice than me okay
00:01:21 00:01:24 but I wanted to quickly get on here and
00:01:22 00:01:26 answer this question because it's such a
00:01:24 00:01:28 common question that I get from you guys
00:01:26 00:01:30 is when should you start an LLC for your
00:01:28 00:01:33 drop shipping business now to quickly
00:01:30 00:01:35 give you guys a a real quick answer to
00:01:33 00:01:38 this is I've got a look at it in two
00:01:35 00:01:40 ways I kind of look at it as the the
00:01:38 00:01:42 risk side of the business so for example
00:01:40 00:01:45 I'm starting a supplement business that
00:01:42 00:01:46 is my like next seven figure ecommerce
00:01:45 00:01:48 business I'm starting right now
00:01:46 00:01:50 and it's a supplement okay so a
00:01:48 00:01:51 supplement people consume right they
00:01:50 00:01:53 they eat it they could potentially get
00:01:51 00:01:56 sick they could potentially it might not
00:01:53 00:01:58 sit well with them right and it's oh
00:01:56 00:01:59 it's more high risk right and every no
00:01:58 00:02:01 two people are the same right just
00:01:59 00:02:03 because if something works for me maybe
00:02:01 00:02:04 one out of a thousand people might not
00:02:03 00:02:07 enjoy it maybe it makes them feel a
00:02:04 00:02:08 little sick whatever right and there
00:02:07 00:02:10 have been case
00:02:08 00:02:12 about cases with just about every single
00:02:10 00:02:13 supplement out there where there are
00:02:12 00:02:15 some legalities there's some legal
00:02:13 00:02:17 battles that come into play where our
00:02:15 00:02:19 person a is suing this company about
00:02:17 00:02:22 olive oh and it's just it's a mess now
00:02:19 00:02:24 you want to have an LLC for those kind
00:02:22 00:02:26 of risky businesses like makeup for
00:02:24 00:02:28 example any sort of consumable and you
00:02:26 00:02:29 sort of supplement anytime somebody is
00:02:28 00:02:31 putting something on their face or
00:02:29 00:02:34 eating something I would recommend you
00:02:31 00:02:37 get an LLC started right away because
00:02:34 00:02:39 it's a barrier to protect you in case
00:02:37 00:02:41 that your customers maybe don't react
00:02:39 00:02:43 well to your product they get a rash
00:02:41 00:02:45 from using like some sort of skin cream
00:02:43 00:02:47 that you sold and you need to be able to
00:02:45 00:02:49 create that that kind of like that
00:02:47 00:02:51 protection for yourself so I would
00:02:49 00:02:54 recommend starting an LLC right out of
00:02:51 00:02:56 the gate guys right out of the gate for
00:02:54 00:02:58 your business okay now if you're selling
00:02:56 00:03:00 like for example fishing lures
00:02:58 00:03:03 things that aren't necessarily that
00:03:00 00:03:05 risky like little bracelets and and
00:03:03 00:03:07 stuff like that me personally I would
00:03:05 00:03:10 wait and see how many sales I'm getting
00:03:07 00:03:11 right I would say hey okay you know my
00:03:10 00:03:13 first month I did a thousand dollars in
00:03:11 00:03:15 sales Oh next month it's it's slowly
00:03:13 00:03:16 climbing right then I recommend okay you
00:03:15 00:03:18 know what after a few months of
00:03:16 00:03:19 consistently a consistent growth in your
00:03:18 00:03:22 business that's what I would recommend
00:03:19 00:03:24 hey you know what go get a format LLC
00:03:22 00:03:26 for your business okay and again this is
00:03:24 00:03:28 not legal advice this is just my my way
00:03:26 00:03:30 of thinking my way of doing things but
00:03:28 00:03:31 if you are looking for a legal dress
00:03:30 00:03:33 please go seek an attorney go seeking
00:03:31 00:03:34 account goes seek somebody else that is
00:03:33 00:03:37 a trained professional in this stuff
00:03:34 00:03:41 okay now as far as where to form your
00:03:37 00:03:44 LLC's meet personally I always form my
00:03:41 00:03:47 LLC's in with LegalZoom okay LegalZoom
00:03:44 00:03:49 super easy super quick and I always get
00:03:47 00:03:51 a registered agent so you might be
00:03:49 00:03:54 wondering what is a registered agent do
00:03:51 00:03:56 I need it okay so to my understanding it
00:03:54 00:03:58 again I have a team behind me that I
00:03:56 00:04:00 kind of helps me walks me through this
00:03:58 00:04:02 stuff but Thibodeau
00:04:00 00:04:04 is is if you plant for example let's say
00:04:02 00:04:08 you live in Pennsylvania and you want to
00:04:04 00:04:10 form an LLC in Delaware or Wyoming to
00:04:08 00:04:13 get like good tax benefits tax breaks
00:04:10 00:04:16 then you need a registered agent to kind
00:04:13 00:04:17 of in that in that state to kind of
00:04:16 00:04:19 represent you so to speak now again I
00:04:17 00:04:20 don't know the holy galleys of it all I
00:04:19 00:04:23 know is that
00:04:20 00:04:25 you do need a registered agent at these
00:04:23 00:04:27 locations and where you plan to have an
00:04:25 00:04:29 LLC if you are not physically present
00:04:27 00:04:31 there now I've always use Legal Zoom as
00:04:29 00:04:33 my registered agent and you might be
00:04:31 00:04:36 wondering well how do I set that up so
00:04:33 00:04:37 as you buy your LLC if you buy use it
00:04:36 00:04:38 through Legal Zoom or wherever you
00:04:37 00:04:40 decide to buy from it'll walk you
00:04:38 00:04:41 through hey do you need us to be a
00:04:40 00:04:43 registered agent and explains to you the
00:04:41 00:04:46 process right Legal Zoom is super super
00:04:43 00:04:48 simple to use and they explain the whole
00:04:46 00:04:51 process very well zan a registered agent
00:04:48 00:04:54 it does cost you a monthly fee I believe
00:04:51 00:04:55 per LLC it's about 179 a year don't
00:04:54 00:04:59 quote me on that but I believe it's
00:04:55 00:05:00 around 179 from Legal Zoom per year to
00:04:59 00:05:02 have that reg have them act as your
00:05:00 00:05:04 registered agent I know some of you guys
00:05:02 00:05:05 that are really into this stuff my bill
00:05:04 00:05:09 while you're ripped off you get somebody
00:05:05 00:05:10 for $79 I don't care it's a hundred
00:05:09 00:05:12 bucks and I truly don't care over a span
00:05:10 00:05:15 of a year it really doesn't matter to me
00:05:12 00:05:17 so if you're planning to write a comment
00:05:15 00:05:19 like that I truly don't care my
00:05:17 00:05:20 convenience is there I don't have to add
00:05:19 00:05:21 a sight out of mind for me that's the
00:05:20 00:05:22 way I like to operate my business and
00:05:21 00:05:25 not be all up in the nitty gritty
00:05:22 00:05:27 details of everything okay and I have a
00:05:25 00:05:29 team like I said that mostly does all
00:05:27 00:05:31 these kind of legal financials all that
00:05:29 00:05:33 stuff for me so I can focus on building
00:05:31 00:05:36 my business and Legal Zoom is so simple
00:05:33 00:05:38 to use that it for me I recommend it now
00:05:36 00:05:40 I know there are lots of other places
00:05:38 00:05:43 where you can get your LLC's form guys
00:05:40 00:05:44 there's a ton of different sites out
00:05:43 00:05:47 there that you can get LLC's from for
00:05:44 00:05:49 cheaper probably but again I can only
00:05:47 00:05:51 recommend what I do I've formed multiple
00:05:49 00:05:54 multiple LLC's all through Legal Zoom
00:05:51 00:05:57 and never had an issue I have LLC's all
00:05:54 00:05:59 over the place not just in my location
00:05:57 00:06:01 right now for different tax breaks and
00:05:59 00:06:03 tax purposes now you might be wondering
00:06:01 00:06:06 well where are some good places to to
00:06:03 00:06:08 form your LLC's now if you're just
00:06:06 00:06:09 starting out honestly I would recommend
00:06:08 00:06:12 just forming it where you're where you
00:06:09 00:06:14 live just to keep it simple for yourself
00:06:12 00:06:15 that's just my recommendation that's
00:06:14 00:06:19 what I did when I first formed my first
00:06:15 00:06:21 LLC years ago now but if you if you kind
00:06:19 00:06:23 of have like a financial team behind you
00:06:21 00:06:26 that can kind of handle all of this for
00:06:23 00:06:27 you typically a good places with online
00:06:26 00:06:30 businesses to form LLC's is going to be
00:06:27 00:06:32 like Wyoming and Delaware those are like
00:06:30 00:06:33 the two biggest and best states to kind
00:06:32 00:06:34 of for
00:06:33 00:06:36 LLC is for a different kind of tax
00:06:34 00:06:37 breaks and and all that cool stuff that
00:06:36 00:06:41 comes along with you can go research
00:06:37 00:06:42 that on your own but guys just to just
00:06:41 00:06:44 to quickly I finish up this video and
00:06:42 00:06:47 kind of recap everything we toked about
00:06:44 00:06:50 if you are in a more high-risk business
00:06:47 00:06:52 a business or you have consumer people
00:06:50 00:06:54 consuming your products using your
00:06:52 00:06:56 products putting it on on their face
00:06:54 00:06:59 skin or consume eating it consuming in
00:06:56 00:07:00 any way shape or form I would start now
00:06:59 00:07:02 I'll see right away just to give
00:07:00 00:07:03 yourself that protection guys you'll
00:07:02 00:07:05 sleep better at night and if you're just
00:07:03 00:07:07 some trinkets and little things here or
00:07:05 00:07:09 there I would hold off I don't think
00:07:07 00:07:10 it's necessary to start until you see
00:07:09 00:07:12 hey you know what this is a business I'm
00:07:10 00:07:14 actually gonna commit to you can also do
00:07:12 00:07:16 little things like holding companies as
00:07:14 00:07:18 well which I have slowly started doing
00:07:16 00:07:20 holding companies where and then you
00:07:18 00:07:23 just create LLC's off of that holding
00:07:20 00:07:24 company but definitely guys if you're
00:07:23 00:07:26 doing this and you really want legal
00:07:24 00:07:27 advice it's worth going sitting down
00:07:26 00:07:28 with an attorney somebody that knows
00:07:27 00:07:29 what they're toking about giving them a
00:07:28 00:07:31 couple hundred dollars for an hour of
00:07:29 00:07:34 their time and asking them all the
00:07:31 00:07:35 questions you could ever want okay it's
00:07:34 00:07:37 a up I'm telling you it is well well
00:07:35 00:07:39 well worth it you guys inside our
00:07:37 00:07:40 program have my connections who I use
00:07:39 00:07:43 for all this stuff it'll be inside your
00:07:40 00:07:45 black book of contact contacts inside of
00:07:43 00:07:46 module six or seven so you have access
00:07:45 00:07:48 to all the people that I use for my
00:07:46 00:07:49 financials and all this stuff so guys
00:07:48 00:07:50 that is it for today's video if you
00:07:49 00:07:51 found it helpful
00:07:50 00:07:53 or if you have any questions whatsoever
00:07:51 00:07:56 drop a comment down below if you found
00:07:53 00:07:58 it helpful drop a smash that like button
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00:08:09 00:08:12 is it for today's video I hope you have
00:08:10 00:08:16 an absolutely fantastik rest of your day
00:08:12 00:08:16 and remember your empire starts now
00:08:16 00:08:26 you