Hi Reader!

There are four legal business types:

• sole proprietorship
• partnership
• LLC
• corporation

The first two, sole proprietorship and partnership, you automatically become as soon as you start offering your services or selling your products. The only distinction between the two is if you are doing it by yourself or with one or more friends. If you are going at it alone, you are a sole proprietorship. If you are doing it with friends, a partnership.

As Michael Scott learned, you can't just say, “I declare bankruptcy!” to declare bankruptcy in The Office. You can't say, “I declare an LLC!” and become an LLC. To become an LLC (or a corporation) you have to file paperwork with your state.

Businesses become LLCs and corporations for the legalese concept of limited liability.

What limited liability does is erect a fence between your business and personal life. So when problems crop up, they stay on their side of the fence. (Learn more about what situations an LLC/corporation will and won’t protect you.)

LLCs can give you tremendous peace of mind. But comes with expectations and costs. And they aren’t right for every business.

👉 Your action item: Write 1-2 sentences about why the best decision for your business is being a sole proprietor, partnership, or LLC. (You can read here why I think corporations are rarely the right answer.)

For example, I might write, “Being the artist’s J.D. LLC helps define the separation between when I’m acting as a lawyer and when I’m acting as a friendly legal eagle. It also provides a layer of protection for my malpractice insurance, asset protection, and tax savings.

Having this explanation is helpful for two reasons:

1. When you feel pressure to be a different type, you can turn to this and remember why this is the best decision for your business.
2. If you are an LLC/corporation, you can turn to this when you are annoyed at the extra red tape or expenses and remember the benefits this legal entity is providing you (and your loved ones).

Not sure the right answer for your business?

• Want more information about if an LLC might be right for your business? Then check out this in-depth “Should I be an LLC” guide.
• Did you decide that it’s time to make the switch to an LLC? Get your step-by-step roadmap to creating and maintaining your LLC in my book.

Did you complete this task? Come share what you wrote on LinkedIn or Facebook.

I'll be sitting at my computer until about 9:30 AM Pacific and I'd love to know if you run into any roadblocks in completing this week's task. (And if you are reading this after then, please reply! I'll get back to you ASAP.)

Chat soon,

P.S. If you’ve been putting off copyright registration because it seems confusing, time-consuming, or expensive, you’re not alone. But it doesn’t have to be that way.

Join my 4-week live challenge, and together, we’ll build a copyright strategy that actually works for your creative business.

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❤️ Easy to understand legal resources should be available to every creative, regardless of their financial situation. If one of my resources has helped you and you would like to say “thank you”, you can make a contribution here. ❤️