Featured Coaching Training: Start Here Book - 4.1.2 It's About Time to Form That Limited Liability Company
If you've ever wondered about the details surrounding the formation of a Limited Liability Company, this business coaching series will resonate with you. Learn how you know when it's time to form a Limited Liability Company, and the steps you must take from start to finish.
Featured Coaching Excerpt - Notes & Transcript, Part 1
Action Step: 6. Push out a notice in the states that require it.
Action Step: 7. Get the appropriate licenses and permits.
Lesson Nugget: You need to make sure you have sold 15 services or products before forming an LLC because the process is momentum killing.
Need Help or More Information? : For an in-depth training on How to Form an LLC and information on setting up other legal documents, visit:
To download an Operating Agreement Template, visit: www.Thrive15.com/operating-agreement-template
email us: firstname.lastname@example.org
call us: 1-800-594-4457
Execution: -Articles, Licenses, and Permits (Part 1 of 1)
Clay: Next thing, number six is, you want to, you want to basically be-- push out a notice in the states that require it. So, if you’re in the states, many states require you to tell the world in the newspaper.
Interviewer: Okay, wow.
Clay: Do you know, there are states that have different laws. In Oklahoma you can't buy alcohol from a liquor store on a Sunday. You can't buy cold alcohol ever, from a liquor store.
Interviewer: I know. I've been in Arkansaw one time and they had it chained up. You can't buy it-
Clay: Have you ever been to California, where you can just buy alcohol-
Interviewer: All of the time, any time, anywhere, yes.
Clay: I'm pretty convinced it could be-- anyway, in Oklahoma it's like "Hey, we don't mind you buying alcohol on Saturday, but after 8 o'clock on Sunday--" you can go to a bar and buy it. Who made these-
Interviewer: My mom says they live in a pseudo-prohibition state still.
Clay: Who makes these rules? I don't know, but each state has their own rules, right? Your state is going to say "You have to put a notification in the newspaper that you're operating." No one's going to read that, but you have to, because it's required. Some states say you don't, and I don't know all the rules, but your attorney does, and if he doesn't, you don't use that attorney anymore. That's a big thing.
The next thing is, you have to get the appropriate licenses and permits. I have some music for this.
This is what getting a permit is like. If you live in New York and you are in the insulation business, it's a big, deep thing. You're going to walk into a room, and when you walk into that room, there's going to be a man. The man will say to you "Are you here to get your license to be a contractor?" You'll say "Yes" and he'll say "I need you to get into your inner man and focus with me, and I need you to write me a cheque." That's about as deep as it is to get a license, and I'm telling you, there's some places-
Interviewer: I thought I was going to have to, like, scale a mountain top [crosstalk] do, or like--
Clay: No, but some states, you have to take a test.
Interviewer: Stop it.
Clay: In New York, this is the real deal. A very good friend of mine, he just got a license in New York, and in the room, there's always Hispanic guys, and there's all these guys who are from different countries, and none of them speak English, and they're all asking him, and my buddy speaks multiple languages, so he's talking to them, and they're like "We don't understand the test." The guy who's doing the exam, is like, "Just write me a cheque and I'll check the boxes and you have your license."
Interviewer: Stop it.
Clay: Not kidding, and I'm telling you, that is in most places I see this process, and there's the thing called a permit. I live in Broken Arrow, Oklahoma, and a permit is what? Another tax. With the power of a checkbook, you could, too, get your permit. There's some online degrees you can do that way.
Clay: All I'm saying is, don't over-complicate it, but you have to have all of this stuff-
Interviewer: I do take your point now, about the online thing. I get it.
Clay: Check it out, why would you want to have 15 sales of some kind before doing all this? I'll tell you why, because this is a momentum-killing-- look at this. Step one - we've got a-- First, I'm going to be sued, okay. That's pretty quick, as a decision, but finding an attorney? That takes time.
Our recommendation-- I'm not allowed to make any money as a result of it, although people might say "You're making money on that." I cannot make any money as a result of it, but I'm saying Winters & King is a firm I can recommend to you. You have to find an attorney, then you have to select the name of your business. You have go to find out "Can I use the name," that takes time, probably going to take your attorney a couple days.
Then, you have to write your articles of incorporation, which requires you to sit down and think about it, then you have to create an operating agreement, which requires you to think about it, then you've got to push out a notice in the newspaper, then you've got to get the licenses. This is all time-killing stuff, and you know what? It might not all be needed at all if you can't sell anything.
Interviewer: Got you, so you don't want to waste time doing it if you haven't proven that this is a viable product.
Clay: I would say that 8 out of 10 people that I know, who are excited about a business, after they determine they can't sell it, they're no longer excited. Truth cannon, how many people do you know who have made an LLC for something that they don't do anything with?
Interviewer: I do.
Clay: We feel like that's the first step to being a business owner "I need an LLC." No, the first step is try to sell something.
Interviewer: Okay, that's so good to know, because, yes, it is a common thought. I know I felt that way. Get your LLC going, get your name, pick your name, so it's good to know you have to make sure, can you sell anything?
Clay: This is different and I want to give you just one little final thought on this. I would argue, if you're in college right now, I know, people have written and then they say "Do you want everyone to drop out of college?" No, if you want to be an attorney, or a doctor, don't just try to hack your way through by reading some blogs.
What I'm saying is this, If you want to be an attorney, don't go to school first. Go intern for six months and just work there, and go "Is that what I want to do?" If you want to be a-- my wife wanted to do broadcast journalism, and then she interned there after getting the degree, or right before, and she went "Oh no." In college, in my mind, the internship should be first, so you could learn whether it's worth the time, but so many people then just spend four years. Now you feel obligated.
This happens with LLCs - people spend six months, six months sharp trying to get their LLC and their name and all their documents, and they're like "Since I've already done this, I feel obligated to continue with my plumbing company." If you try to sell it first-- someone says "That's illegal, what if you get sued?" It's 15 customers, you have no money anyway, what are they going to get? If someone sues you, what are they going to get? Nothing. "I got six bucks in my account and I have a wrench."
Interviewer: Take it all.
Clay: Most people starting a business don't have copious amounts of money. If you have a money when you're starting a business, do this first, but most people don't.
Interviewer: Got you. This is so good, thank you so much for breaking it down, explaining why you don't need to go online and you need an actual attorney who is representing and working with you. We have some trainings that can help at Thrivers we’re learning how to form an LLC. We also have other legal training documents, a template for an operating agreement. We'll put all the links up on the screen. Clay, thank you so much for breaking down, and this section of your awesome business coaching book that tells us about forming an LLC.
Clay: I like to break it down-- I'm breaking own like Robert Downey Jr.
Interviewer: Do you have the Iron Man suit?
Clay: I don't, but that's kind of what I think being an entrepreneur is - you just try not to break down, put the Iron Man suit on.
Interviewer: Put it on, put it on.
Clay: There it is.
Interviewer: Until next time, Thrivers. Thanks for joining.