I'm starting a small consulting gig in NYC and I'm getting mixed advice. Some people say form the LLC first to protect yourself, others say wait until you have signed clients so you don't waste money on fees. What did you actually do?
LLC Formation
New york city business owners, did you form your llc before or after getting your first clients?
Formed after. I wanted to make sure there was real revenue before dealing with the paperwork and annual fees.
Before. I didn't want to sign a lease or any client contract personally. The liability protection was the wHole point for me. The LLC fee is nothing compared to a potential lawsuit.
I did it before getting clients, but honestly it was mostly because my first potential client asked for my EIN and a W-9. I felt more legit being able to give them an LLC name.
What kind of consulting?If you're doing anything where you give advice that could be relied upon, I'd form it now. The publication requirement in NYC is annoying but it's a one-time thing.
It's marketing consulting for small restaurants. Mostly strategy and some social media. Nothing that feels super high-risk, but I guess nyone can sue.
After. I operated as a sole prop for almost a year. It worked fine but I had to open a separate bank account and keep receipts. The LLC came when I landed a bigger client who required it.
Before. I filed the articles and got my EIN. Then I waited another two months before I actually got a paying client. The LLC just sat there. No regrets though.
You can always form it later. The main downside of waiting is that you're personally on the hook for anything that happens before you file. For low-risk consulting that might be a risk you're willing to take.
Not NYC specific, but I formed mine after I had a verbal commitment from a client. I told them I'd need a week to set up the business entity. They were Fine with it.
Also don't forget the publication requirement. That cost me a few hundred bucks and I had to do it within 120 days of filing. It's a hassle but unavoidable in NY.
If you do form it, just make sure you actually run business through the LLC account. I've seen people get their LLC disregarded because they commingled funds. Then the protection is worthless tbh.