I saw this tiktok ad of this content creator saying she didn’t know how to make an llc but she found a company that did it for her and she was promoting the company and saying how anyone can get one. But why? and what is it?
In: Economics
It’s to protect your personal assets in case you are sued. If I have a small company, and do something that someone sues me for, they can bankrupt the company. The LLC prevents them from also bankrupting you personally.
LLC is a Limited Liability Corporation. It is a business entity that is most often used for the business interests of an individual or small group. You can do business solely as yourself, but there is a risk in doing so: If you are ever sued because of the work you performed, any of your personally owned assets can be seized in the lawsuit: Anything you own, your home, vehicle, etc.
If you create an LLC and you are sued because of the work performed by that LLC, only the assets owned by that LLC can be seized: any tools or properties owned or used by corporation, but nothing of any of the employees of the LLC.
In short, its a fairly simple business and legal tool used to protect a person’s private property in a business mishap. There are other benefits to having an LLC but this, as I understand, is the primary one.
> content creator saying she didn’t know how to make an llc but she found a company that did it for her and she was promoting the company and saying how anyone can get one
If you can’t figure out how to set one up on your own, you’re almost assuredly going to break the operating rules involved with having one and pierce the veil of protection, thus rendering the whole thing pointless.
Seeking legal counsel for your business is good. Trusting everything to a company promoting through youtube influencers is questionable at best.
An LLC is an extremely easy to set up business entity. There are multiple “kinds” of businesses which are suited for different needs/ownership groups but LLC’s are extremely popular for the perceived easy use and their official sounding name.
Having a business entity is necessary to do things like pay taxes on your businesses’ earnings and to keep business assets seperate from personal assets. A lot of people who become social media content creators don’t necessarily realize that they are in fact running a business and there are different legal and tax implications.
However there is ***a ton*** of misinformation out there on the benefits of having an LLC especially when it comes to taxes and protecting your assets. If you aren’t running your business “like a real business” and are instead just using it as a pass-through to commit tax evasion or to try to not get sued (which is what a lot of these companies that set them up and social media guru’s tell you to do) it’s relatively easy to get popped for tax evasion or to get sued as there are mechanisms in place to combat this kind of loophole.
So in other words, unless you have a bona fide, actual business there are relatively few legitimate reasons to get an LLC.
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