Questions from a reader on LLCs…

Here is the synopsis of a recent e-mail exchange from a JTC candidate that you may find of interest.

I’ve edited it and sanitized it (personal information is left out), but I’m sure C will recognize herself.

Hi Daryl,

I came to your website from Mister Money Mustache, and I’ve decided to throw my hat in the circle and JumpToConsulting.

I currently work for XXX and intend to do the consulting on the side.  We are planning to follow the MMM path and retire in 5 years, so I decided I wanted to try and make the stash bigger.

I’ve already picked the company name. I am currently working on the website and need to register my trade name.

I’ve received different advice regarding setting up as a sole practitioner or as an LLC. Can you share some advice?

Finally, would you put LLC on your business cards?


Hello C,

Congratulations on your decision to make your own JumpToConsulting! It sounds like it is a good fit with your with your retirement plans too.

By the way, I am a big MMM fan myself. (Hey, he’s another engineer who broke free…)

Here are some comments:

Recommend the LLC over a sole practitioner. From a marketing perspective, I think it lends more credibility — it shows you are serious. It may also provide some legal protection, but you should talk to an attorney for clarification.

Recommend using an attorney to do the paperwork. Yes, you can do it yourself, but to me it is worth a few hundred bucks to know it has been done right.

– Ask around to find an attorney who specializes in small businesses. I prefer small firms (one or two lawyers) as they generally cost less and are more personal. Plus, I just like dealing with small practices. I also do the same thing with accounting, and have used a two person CPA firm for many years.

However, if you are just testing the waters, the sole practitioner may be OK for now. We did that for nine years as part time consultants, but incorporated as a Subchapter S corp when we we went full time in 1987. (LLCs were not popular then, so the Sub S made the most sense.) If you change later, however, you may need to update printed materials (letterhead, cards, brochures, etc.) to reflect the LLC status.

Regarding LLC on your business cards, my understanding is that if you are an LLC (or any other type of corp) you should put that on your business cards. Check with your attorney, but I believe that gives notice to your clients that you are incorporated. I’d do it anyway as it enhances your marketing image.

Really like your company name! Yes, you want to register it. You may want to trademark it too. We trademarked EMIGURU which is our website and which we use in our advertising. Glad we did, as it gave us leverage when a cyber-squatter picked up the .net and .org extensions and then used them in a competitive way. Because of the trademark, we were able to stop that. However, it cost us about $2K to resolve the issue.

– So, when you register your domain, pick up the .net and .org extensions, in addition to .com. You might want to pick up others, too, but those are the most common.

It sounds like you have identified your initial market place – needs, geography, type of business, etc. This is good, as it lets you focus your marketing efforts. But be ready to make changes as you move into those markets as you learn more.

— The markets will guide you. Try not to spread yourself too thin, though, or go in too many directions. “Do a little, do it well — you’ve done a lot.”

-One more piece of advice. Since you will be consulting part time, be particularly careful to avoid conflicts of interest. You don’t want to jeopardize your day job. And keep a low profile — petty jealousies can arise (the voice of experience speaking.)

Finally, I applaud your decisions, both the MMM-path and the JTC-path. I’ve followed both paths for many years, and they have paid off for me.

Thanks for reading my blog, and best wishes in your new adventures!


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