When to Form Your Legal Entity

Blog Post

The legal entity is a scary step for some people.


Well, it kind of formalizes that you are actually DOING this entrepreneur thing.

And…not everyone knows how to start.

Don’t worry. It’s not that bad. It is actually so easy, that it takes minutes. And when it’s over, you’ll feel really great about getting it out of the way.

Kind of like getting the oil changed on your car. (Am I the only one who puts that off?)

Your legal entity is important. Besides giving you business formality, it is something that allows you to actually deduct business expenses and list revenues at the end of the year. Every year your business is in operation is important, and you want to get going as soon as you realize you want to be in business.


When to form your legal entity:

The first year you will start to incur costs or get sales, you should have your entity formed. These costs may entail anything from setting up business class internet service, to deciding to use a virtual office, to paying for branding materials. No matter how small the cost or sale, this is your pivot point: this is when you should form your legal entity.

When it comes to forming a legal entity, many people feel a bit overwhelmed. This is normal, and often stems from feeling unfamiliar with your choices. There are multiple legal entity options, and you can go here to see which one is best for you.

The most common form for a start up is an LLC for several reasons. For instance, it’s typically the right choice for a simple tax season, as you can usually file your business taxes with minimal adjustments to how you normally file as an individual.

Before you move forward with your entity, you will need to know:

  1. Who you will list as the owner(s) of the business
  2. What business category you will fall under (there’s a list you will be able to choose from)
  3. Whether your desired business name is available (check with your state’s Secretary of State website)

You can file yourself and it is relatively inexpensive, or hire a service for under $1,000.

Whichever the case, it is not a big investment in the grand scheme of your business, and you should invest sooner rather than later.

Just like getting that oil changed…you need to do it, and it’s a bigger deal in theory than it is to just get it done.

Finding A Provider to Help with Forming YourLegal Entity

If you need a recommendation for finding a professional to help you form your legal entity, Written Success can help. Contact Ashley for advice on where to find a trusted legal resource to support your entity formation.

Ashley Cheeks

Author Ashley Cheeks

Ashley Cheeks is a Business Plan Consultant. Her core business plan writer expertise is in designing business plans for bank and investor funding. She founded Written Success after years of being a professional business plan writer as a freelance consultant, and working for companies including GE and Fluor. She lives in Houston with her husband, daughter and son.

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