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?
Table of Contents
When Should You Start An LLC For Your Dropshipping Business?
| startTime | durationTime | text |
| 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 |
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| 00:00:36 | 00:00:39 | answer your questions |
| 00:00:37 | 00:00:42 | down below but we release new videos |
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| 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 |
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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 |
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