“Video” answers to “Frequently Asked Questions”
Hey, everyone, welcome to V-FAQ’s. I’m attorney Joe Collier and today we’re going to talk about what you need to start a business. Now what you need to start a business is yes, registering your business name. But a lot of people stop there, that’s not enough that you will not get any legal protection from this business entity that you haven’t created yet, because you’ve only registered a name. What you need is to create that entity, it’s got to be different than yourself, which means it needs to have its own tax ID number that’s called an EIN, you go to the IRS website to get that. Then you take that tax ID number and you get it bank accounts, you cannot be commingling your money and the business money in the same accounts.
Now, the next thing you want to do is you want to get a document that creates rules for your company, that nine times out of 10 you’re starting an LLC. So that document is called an operating agreement. Why do you need that? Why do you need rules, even if it’s just one person that owns the company, even if it’s just you on your own? You need that because when someone sue’s your company, they are going to try to sue you as well. So all of these things create a separate entity, it makes it look like it’s not just you acting under a name, it’s a separate entity, it creates the separation is called a corporate veil. And part of that corporate veil is documentation that creates rules for the company. When someone tries to pierce that corporate veil, and get your personal assets, your home your income from actual wages, that corporate veil is pierced by five factors. One of the factors is the existence of a document that creates rules that govern the business. And another factor is whether or not your business follows those rules. So two out of five of the factors are completely dependent on the existence of an operating agreement. If you don’t have that, you’re probably going to be personally liable. And there was really no point starting the business at all. So make sure you get that operating agreement. Get your name registered Secretary of State country I am with the IRS, create your bank accounts, get your rules and follow the rules of the operating agreement that you set. That’s all for this video. Thank you for watching, and I’ll see you next time.