How Do You Set Up an LLC for a Startup?

[0:00] hey there and welcome back to Startup

[0:02] cheuck today we're going to talk about

[0:04] business setup so you might wonder what

[0:08] there is to business setup and do you

[0:10] need to set up a business yet well it

[0:12] really depends on your prototyping so

[0:16] can you prototype your product without

[0:20] having to raise Capital if you don't

[0:23] have to raise Capital then you probably

[0:26] don't need to set up your business yet

[0:28] and you might find that you'll save

[0:31] money that way because you can just

[0:32] continue to prototype and you may never

[0:34] actually ever get to the point where you

[0:37] are ready to raise any money so you

[0:39] don't need to have your business set up

[0:40] at all um or you might lose interest so

[0:44] let's just say though for the sake of

[0:46] argument that you do need to raise some

[0:49] money either through friends or family

[0:52] and order to get your prototypes made um

[0:57] so first thing you want to do in a

[1:00] business setup is you want to think of a

[1:03] name right so a domain search is a great

[1:06] way to do it so let's go to a domain

[1:09] name company we're going to go to

[1:12] GoDaddy and let's look up oh we'll just

[1:17] use

[1:21] banana.com

[1:25] now look at that I can get bananer

[1:30] for oh the first year great so that's

[1:35] the first thing you want to do is your

[1:37] domain name available if it's not

[1:40] available then you just got to keep

[1:43] looking and thinking of new names now

[1:44] one thing I like to do is I like to

[1:46] create a matrix in Excel or a list of

[1:51] all the possible names that I could

[1:54] have um use your friends and family it's

[1:57] great to have a whiteboard up and then

[1:59] everybody's throwing out ideas about

[2:01] what the product might be so let's say

[2:03] the product is you know some sort of

[2:07] banana peeler right uh if if you're

[2:10] doing that then you basically would say

[2:14] okay uh what are things that remind you

[2:18] of bananas fruit

[2:21] or um peel or and then like what is the

[2:26] thing doing and so you create like

[2:30] clouds of the different aspects of it

[2:33] and then you mash them all together and

[2:34] then you run all those ideas past each

[2:37] other and see which ones you know end up

[2:40] in everybody's top 10 list for like

[2:42] coolest name and then go back to

[2:45] godaddy.com or some other domain site

[2:48] and search and see if it's

[2:50] available so in this circumstance it is

[2:52] available which is great so the next

[2:54] thing you need to do is double check

[2:56] trademark because just CU you own the

[2:58] domain doesn't mean you have the

[3:00] trademark so in order to do that we

[3:03] would want to go to the

[3:06] USPTO trademark

[3:09] search and so I'd shown you this a

[3:12] little bit

[3:13] earlier again make sure you have the

[3:15] actual uspto.gov

[3:17] website and you want to click on

[3:21] it and then we're going to go into the

[3:25] trademark electronic search and we're

[3:27] going to do a basic wordmark search

[3:30] and then um we can do live and dead and

[3:33] we can look up banana

[3:38] bopper

[3:40] okay try all one

[3:47] word let's just see what other things

[3:50] have bopper in

[3:51] them um and you could go through and see

[3:55] whether or not there is anything related

[3:59] poppers peanut butter nut base snacks

[4:02] Etc and similar to the patent search and

[4:05] trademark search that I talked about

[4:06] before you would basically want to go

[4:09] through all

[4:11] these um in this case there is 108

[4:14] records found if you don't care about

[4:16] the dead ones you can go back only look

[4:19] at live ones and you have significantly

[4:22] less than other there's only 20 um so

[4:24] you can go through here

[4:27] okay um chances are though banana bopper

[4:30] the trademark would be available um

[4:33] let's say

[4:34] somebody you don't have to trademark

[4:37] anything um if you look at this package

[4:40] for example you can see that it says

[4:42] banana Boer TM TM means I'm saking my

[4:48] flag in the sand for trademark meaning

[4:50] it's not registered I didn't get the

[4:52] little r around it but I'm letting

[4:55] everybody know I plan on potentially

[4:57] trademarking this in the future and

[5:00] don't use it it's mine and so you'll see

[5:03] that a lot of places they put TM on

[5:05] everything and if you plan on

[5:06] trademarking anything you should put a

[5:08] TM up in the corner it is easier to

[5:12] defend if you ever get into a trademark

[5:14] lawsuit which I hope you don't later on

[5:16] if you say look I've been putting TM

[5:19] next to this for years on all of these

[5:21] things

[5:23] and I should have a right to it and then

[5:26] typically the court would side with

[5:28] whoever had the most use of it early on

[5:31] so that way if somebody does go in and

[5:32] try and get your trademark out from

[5:34] underneath you you could prove that you

[5:35] had been using it for years

[5:38] prior uh when you actually register a

[5:41] trademark which isn't very expensive it

[5:44] will eventually add that little r uh

[5:47] around the corner and then you have you

[5:49] know actual legal rights to then sue

[5:52] other people um if they infringe on your

[5:54] trademark so you do a trademark search

[5:58] like I state and then the next thing

[6:00] that I like to do is um do a business

[6:05] name search so for example in Utah

[6:12] um if you want to do register your

[6:15] business you would go to the Utah

[6:18] business government website which if I

[6:21] just look up Utah business registration

[6:23] here um it's actually be careful you

[6:25] don't go to the first few it's all

[6:27] sponsored links right

[6:30] um so you go to the online business

[6:33] registration here and you would click it

[6:37] and I'm going to open it in a new tab

[6:38] because I actually want to do business

[6:40] registration name search see if that'll

[6:43] come up Utah business search there you

[6:46] go so you can come here here type in a

[6:49] company snow let's see here Crown

[6:54] roller does that come up anymore Crown

[6:57] roller cycling so like with my previous

[7:00] company Crown roller cycling LLC which

[7:02] is now expired um you'd want to come in

[7:05] here and see if anybody else has the

[7:07] same name of the company that you're

[7:09] looking to do and doesn't have to mean

[7:11] that it's your product per se but uh

[7:14] your your company name

[7:16] itself and so in this case it's expired

[7:21] so therefore I'd be free to use the

[7:22] company name um in Utah rather now there

[7:28] is whe whether or not you want to do an

[7:31] LLC or a C Corp or an S corp and which

[7:36] state you want to file in most people

[7:39] who do tech

[7:40] companies file in Delaware and that is

[7:44] because the entire Venture Capital world

[7:46] and business world uh prefers Delaware

[7:50] law and since most companies were

[7:52] registered in Delaware over the years

[7:54] Delaware has the most business-friendly

[7:56] law and precedence in law

[8:00] uh than any other state and so there's a

[8:04] lot of benefits to if your company gets

[8:06] sued then it gets sued in the Delaware

[8:09] Court and then

[8:11] therefore um it's I guess a lot more

[8:14] known what'll happen in the case um if

[8:18] you're not going to have a tech company

[8:22] and you can always change it too it's

[8:24] kind of a pain but if you're if you're

[8:26] not going to have a tech company I would

[8:28] say register in your home State um

[8:30] unless it's ridiculously expensive for

[8:33] some reason um but it's just much easier

[8:36] to be able to register in your own state

[8:37] if you register out of state like

[8:39] Delaware for example you have to have a

[8:43] po. box out there you have to have

[8:45] somebody who goes and registers on your

[8:47] behalf and is a managing person for that

[8:51] registration and it's a big hassle so

[8:53] you can do it but again you're going to

[8:55] be spending a lot of money to have

[8:56] somebody else register for you versus in

[8:58] Utah it cost me $53 to do a business

[9:01] registration for a year so you know

[9:05] hundreds possibly thousands of dollars

[9:06] versus 53 this is a bootstrap startup

[9:09] that I'm trying to teach people to do

[9:11] not you know uh high value tech company

[9:14] but if you have the money from investors

[9:17] or you think you will uh then that's

[9:21] when you'd want to do that um but you

[9:23] could even do that after your seed

[9:25] funding if you get seed funding and then

[9:29] change use that money to change your

[9:30] business registration you could totally

[9:32] do that um the point though of

[9:35] registering your company getting an LLC

[9:37] is protection you want to have

[9:40] protection and okay this is my warning

[9:42] legal warning I am not a lawyer I take

[9:47] everything I have um with a grain of

[9:49] salt but

[9:52] uh llc's are designed to give you

[9:56] limited

[9:57] liability um this is why people set up

[10:00] llc's so that if somebody sues them they

[10:03] can they sue the company for the

[10:05] company's assets not you personally for

[10:07] your personal assets and if you are an

[10:10] individual and you are the only member

[10:13] of your LLC you can do pass through

[10:15] taxation and again I'm not an accountant

[10:18] so uh take this at face value but uh you

[10:22] can typically do pass your taxation so

[10:26] that you don't have to file separate

[10:28] taxes for your company it just goes

[10:30] through all your personal taxes which

[10:33] again you want to keep your finances

[10:35] separate in terms of it's really good to

[10:36] have separate bank accounts for your

[10:38] business compared to your personal

[10:41] accounts uh and then it's also good to

[10:44] have very good uh recordkeeping for your

[10:47] receipts and things like that and I'll

[10:49] probably do uh an episode on all of that

[10:52] later on but um for now uh so you do a

[10:57] trademark search you do a business name

[10:59] search so I for example searched for

[11:01] Crown roller and here it is and uh you

[11:05] know it's available let's say if I

[11:07] wanted to do

[11:08] banana popper tech let's see what shows

[11:12] up nothing it's available great register

[11:15] it awesome so you don't want to

[11:18] register yet and the reason is is that

[11:21] you want to have somewhere all of the

[11:23] emails for all the registrations you're

[11:25] coming through are going to go so my

[11:27] suggestion is this is where you now go

[11:30] to Google and you want to create an

[11:35] email so

[11:37] Banana well you just put your first and

[11:40] last name in

[11:41] Charles

[11:43] startup whatever and you hit next right

[11:47] enter in some info for your birthday I

[11:49] have no idea what's Valentine's Day

[11:55] 19977

[11:57] okay uh rather not say confirm and then

[12:01] create your own and you do something

[12:03] like

[12:05] banana

[12:08] bopper is

[12:13] great and you

[12:15] check it worked okay so then you'd

[12:18] finish it I'm not going to finish it

[12:20] because I really don't need that email

[12:22] um and I don't want to take it away from

[12:25] somebody who might want that email uh so

[12:29] let's see

[12:30] here

[12:32] um after that basically you got your

[12:35] email you're going to use to start

[12:37] storing everything that you get there so

[12:40] the nice thing that comes with that is

[12:43] spreadsheets so you can now use that

[12:45] spreadsheet in Google Docs for example

[12:49] for all

[12:51] businesses email info and basically

[12:55] every site you go to go daddy Gmail

[12:58] patent office business registrations you

[12:59] can put the dates in you can put login

[13:01] info if you want all sorts of info in

[13:04] here and it's great because you know

[13:06] when registrations will come up what

[13:08] websites that you had to use to do it

[13:10] and if you ever have to go back and do

[13:11] it all again you know like the process

[13:13] that you're going to be going down

[13:16] through so you got your email so now you

[13:19] want to go back and get your domain on

[13:21] GoDaddy so you made sure it was free

[13:24] make it yours do all the sign up Etc

[13:28] then what you're going to want to do is

[13:30] you don't need to get your trademark you

[13:32] know that's available already you can

[13:35] just start putting TM next to everything

[13:38] so you're going to now do uh your

[13:41] business registration so this is the

[13:43] Utah Commerce website of course you're

[13:46] going to be on your own but for here you

[13:49] can just simply do a One-Stop business

[13:51] registration you fill out a bunch of

[13:53] forms and then the key here though is uh

[13:59] you are actually going to need at some

[14:01] point in this process even with um pass

[14:05] through taxation a federal tax number

[14:07] for your LLC that's called an Fe n so

[14:12] you're going to want to go to

[14:14] google.com oops spell it

[14:21] right and you're going to look for f uh

[14:26] Ein registration

[14:29] okay now here's another trick don't

[14:32] accidentally click on things that look

[14:34] like the federal government's website

[14:37] it's none of these irs.gov apply for an

[14:40] employer identification number now

[14:43] something to note is if you're trying to

[14:45] do this in the middle of the night this

[14:47] website is only open during business

[14:49] hours you cannot get an Fein number

[14:52] which is basically a business social

[14:54] security number during the night you

[14:58] have to do it during the day so you

[15:01] might get halfway through your business

[15:02] registration and find out oh man

[15:07] I can't get this and then you have to

[15:09] pause and then get it during the day and

[15:11] then finish it off so uh with that in

[15:14] mind it's good to actually get this

[15:17] ahead of time during the day if you like

[15:19] doing your work at night and then at

[15:21] night when you go to apply for your

[15:22] business um registration you know then

[15:24] you have this already done and the names

[15:26] need to match between this and your LLC

[15:30] so make sure you get that appropriately

[15:32] right here it says Monday through Friday

[15:34] 7:00 a.m. to 10 p.m. Eastern Standard

[15:36] time so don't make the mistake that most

[15:38] people do where they get to do this on a

[15:42] weekend and you can't do it so you get

[15:44] your F you go and you do your online

[15:47] business re registration and then what

[15:50] that's going to spit out is a

[15:52] certificate of

[15:55] organization and so for me it's of

[15:57] startup Chuck

[15:59] LLC and it goes through and it talk all

[16:02] these are the Articles and here's my

[16:05] registration and all sorts of things if

[16:07] you looked at my business online you'd

[16:10] find all that anyways because it's

[16:11] public record

[16:14] so you got that you got your business

[16:17] registration you got your articles now

[16:20] for your LLC every state is different

[16:24] again don't take anything I state with

[16:27] any sort of um legality or weight but

[16:31] typically you have to have meeting

[16:34] minutes and hold them uh and depending

[16:37] on your state it might be monthly it

[16:39] might be annually and then you're

[16:40] supposed to file those with the state in

[16:42] order for your LLC to be legal otherwise

[16:46] you just file an LLC and then how do

[16:49] they actually know that you're trying to

[16:50] be a business right so that is a step

[16:53] that a lot of people forget to do and it

[16:55] doesn't have to be anything special and

[16:57] there's typically you know they'll have

[16:59] requirements written down and the state

[17:01] rules for what minutes need to include

[17:03] but usually the date the time uh what

[17:07] you talked about and who is there um if

[17:11] it's just you there's not much there and

[17:13] then you just print that off and either

[17:16] email it in or attach it inside their

[17:18] online database or mail it to them

[17:20] physically I know they like doing things

[17:23] like physical mail at a lot of

[17:25] government buildings so that's something

[17:27] that you might need to do and then your

[17:30] company at that point is basically all

[17:32] set up so from that point you really

[17:37] need to think about uh getting money

[17:40] which will be another step of this

[17:43] process but um I hope that was pretty

[17:48] good for an idea of how to do basic

[17:51] business setup should save you a lot of

[17:53] time uh especially the headache with the

[17:56] uh federal government not being open

[17:58] except for during regular business hours

[18:01] so if you like what you heard like And

[18:03] subscribe and I will see you all next

[18:06] time