Hi all. I'm currently employed full-time but want to start an LLC on the side with the goal of eventually leaving my job. I have a service-based idea (consulting/freelance) and want to do it right. What are the first steps? Should I form the LLC now or wait until I have clients? Any tips on keeping it separate from my day job legally? Thanks!
I want to build an LLC before eventually leaving my job
Form it now if you're serious. It's cheap and separates liability. Just don't quit your job until you have consistent income.
What state are you in? That matters a lot for fees and registered agent requirements.
I did exactly this two years ago. Started an LLC while working full-time, then left my job after 18 months. My advice: keep meticulous records, get a separate business bank account, and check your employment contract for any non-compete or moonlighting clauses. Also, don't overcomplicate the formation—most people don't need a lawyer for a simple single-member LLC.
Wait, you can just form an LLC without having any revenue? I thought you needed to have a business already running.
^^ Nope, you can form an LLC before making a dime. Some states might require a business license or permit depending on the activity, but generally it's just paperwork and a fee.
Thanks everyone. I'm in California, by the way. I've heard the LLC fee is $800/year here, which is steep. Does that change the advice?
CA is rough with that $800 franchise tax.If you're not making much yet, you might consider waiting or forming in another state—but do your homework, because foreign qualification can get messy. For a side hustle, many just operate as a sole prop until they hit a certain revenue threshold.
I'm in CA too. That $800 is due every year regardless of income. If you're just starting, maybe hold off until you have at least $2-3k in expected revenue to cover it. But if liability is a big concern (e.g., you're giving advice), forming early might be worth it.
Also, check with your current employer's HR about outside work. Some companies require disclosure even for side gigs.
And don't forget to set up a separate bank account and keep personal and business finances separate. That's the whole point of the LLC.
Good point about the employer. I'll review my contract. Appreciate all the input!