I Started An LLC From My Bed, And You Can Too!

hi my name is ali hansen thanks so much for having me and thanks for tuning in today so my talk is called i started an llc from my bed and so can you um it's kind of a funny story so i'll just give you some background but before we dive in i just want to let you know the very typical um covering my behind so i'm not a lawyer i'm not an accountant i'm not an insurance or a financial person or hr um so none of this presentation or if we talk afterwards please don't take it as legal or professional advice and i just also want to caveat that this presentation and my process you know it's not a perfect thing i

learned a lot of lessons along the way and also you know i'm extremely blessed in a lot of different ways and we're all different and so your journey through this should you decide to try uh will probably be different and that's good and that's okay um and then just very you know last thing feel free to dm me anytime hey ellie hansen on twitter so with all of the formalities out of the way let's get started so um first things first i started an llc for my bed it might sound kind of like um an interesting title and it's actually true so let's see i can't believe it's still 2020. somehow it is and in the beginning of the year

um i was kind of so burnt out from my work and i was really um you know i was always a high achiever and i found myself a really low point um just in general in my life and you know i was burnt out mentally physically emotionally which is really um really a difficult thing and i had never really reached that level of burnout before and i hope you know i hope that none of you listening um get to that point because it's it's truly devastating and um you know i was just drained and disintegrated really to my core and um so you know it was like there was nights i went to sleep and i really was so exhausted that i was

not 100 confident that i would even wake up from that sleep it was a really scary time in my life and i would wake up in the morning you know luckily and i would just be so angry and so frustrated like as soon as i opened my eyes and i knew that something had to change and that that was just not a healthy way to be living my life um and so basically um you know the the title of this talk i started an llc from my bed and so can you it's it's actually true right so i stayed um for about two weeks straight i kind of just stayed in bed and then uh slept and recovered and then

slowly but surely i started to think about my next moves and i started to think about um you know what steps i needed to take to get there and sometimes it was just really sending like one email a day or researching one topic a day and i would consider that a success for that day and so i took it very slow and steady and i guess that's you know one of the reasons in addition to um so you'll see there's like a little cell phone icon on the screen and i did most of this for like basically seven or six or seven weeks all of this planning and creation i literally did it on my cell

phone and uh my cell phone was actually cracked so pretty much the worst type of uh situations you can think of for like trying to start a company um so that's why i say you know if i can do it i think you guys can too so um a little bit of background on how that all came to be so i guess the first thing uh that you would want to think about is what do you want to do right it's kind of obvious but you need to think about um you know what what business or what you want to do or what service or product right and you probably you know you might have an inclination of that

already like depending upon your background and your experience and what you want to do um for me i already kind of knew what i wanted to do and that was to provide us consulting service and so i kind of already knew what i was gonna do it wasn't like i had to you know create a tool or um you know make an actual physical invention or anything like that right so for me that was kind of easy um and i'd be you know very happy to talk with you guys about sort of the creation of your idea and what you want to do if that's something that you need help with so for me i already kind of knew and i

had done a lot of informal research sort of in formulating what i was gonna do you know with whom to whom everything um and again you know we could talk about that ad nauseam in terms of like you know sort of market research and things like that if you needed to but for me i kind of knew i had a good idea of what i was going to do was pretty needed so um so after you kind of figure out what you want to do there's a few things for me that i had to really consider and go through so the first thing um is money the second thing is timing and the third thing was like contracts

and legal considerations and your situation might be very different and again this is just you know my story and my journey um so these are the three main things that you know before i really got started i decided i need to figure out these three areas so the first thing how am i gonna get money to you know just give myself a little cushion to live on and to pay whatever these expenses are that are gonna come up because i didn't even know and you know there was really nothing online you know on any of those entrepreneur websites or business websites like nothing was actually really helpful and that's why i'm hoping this is going to

help you all and um in a way that maybe you can't find online just the real answers or a real checklist or real considerations so um that's my hope here so anyway so i was like thinking okay how am i gonna get money and i decided personally that i was going to withdraw some money from i have a few 401k accounts so i was gonna look at the one and i kind of took a survey of all the accounts that i had you know previous jobs and i was looking at um the performance of each different account because some were performing a lot better maybe i didn't want to touch those let those grow more um and obviously different amounts

in each one different penalty rules just kind of different things like that like also maybe certain accounts were charged a certain annual fee others were not right so there's you know kind of some research that you can look into all of your different accounts for your 401k if that's what you decide to do and luckily enough i was able to do that um and so basically just you know so you know um there is a 10 federal fee so that goes to the federal government for withdrawing pretty much any amount um if you're under the age of like 59 and a half which i am so i knew i had to pay a 10 fee on that amount that i was going to

withdraw in addition you will have to likely pay whatever your particular state fee is um so you have the federal level fee and also a state level fee and usually that's less um but you'll have to check with your exact state and then um you will also have to be paying um basically like your taxes on that income that you withdraw from your 401k account so whatever your tax bracket happens to be you kind of attack that on so there's a lot there's a lot of fees that add up um if you go with this route and you know it wasn't necessarily maybe the best route or you know the least fee amount um you know method obviously

but it's what worked for me it's what i had and um so here's a quick example you know just really high level right so let's say you have a 401k account with a hundred thousand dollars in it which by the way i think would be pretty good um and then if you had that 10 federal fee i live in virginia and um so that state fee is 5.75 so um 57.50 and then let's just presume like you know a general tax bracket is not really what i am right now but let's just say that was you know 25 000. so all of those fees are going to subtract out of what you have in your

401k account and then you'll be left with um in this example 59250 as your deposit that'll like go into your actual bank account and that's the money that you really have to use and to live off of um so that's it's kind of like a few things you gotta keep in mind because if you uh if you think that you're going to be able to have all a hundred thousand to spend you know that's not necessarily true um so just be careful of that and i guess one other thing i learned in the withdrawal process is that um because your 401k accounts are likely based on like the real market you know like stock market and

everything um the amount that you are calculating with one day for like your 100 000 um that could maybe the next day be like 99 000 and some change just because of those variances in the market so that kind of threw me for a loop because i wasn't i didn't know about that so just a heads up those could change a little bit um there's also if you're looking at the 401k option this is something i did not know about and i kind of wish i had um so i'm sharing it with you there's also something called a 401k loan and they're selectively available so you'll have to check with your exact account plan um but the great

thing is that unlike the full withdrawal where you're taking that money back in your pocket the loan is is a loan so it's actually not taxed it's not categorized as income going into your wallet since it's a loan which is kind of like a temporary thing and um there could be interest on the loan like kind of in normal loans there's usually some type of interest sometimes there is sometimes there's not you'll have to check and then um you know obviously if you take the money as a loan from your account but you don't put it back you know in time or based on whatever calendar terms that you have um you will likely be facing some type

of fee i i see that the 10 is a is a common number so you know you do have to be careful but that was an option that um i wish i had known about i might have done that um and then obviously you know if you have savings or you have other you know sources of money that's wonderful but this is just what i what i did so i'll share that with you and obviously these are kind of strange times and as such um so covered has also affected the rules and guidance behind 401k withdrawals and so there are sort of a continuation of guidance slash um modified rules um that are kind of in the works

um i just checked with some folks recently and there's still no final guidance out as of right now this recording um on this sort of like forgiveness if you will for um taking out a 401k withdrawal um so basically that would as far as i can tell would sort of um forgive that 10 federal fee and then who knows maybe there's maybe the states will also do something so we're not really sure but there is something kind of in the works there so something to think about and um so i'm gonna pause just really quickly because i know that's a lot of information on the 401ks um and then so the next sort of like

part of money is not only money going in but money going out and i think a lot of people are really curious about you know how much would it cost to do your own thing or you know maybe even in the beginning or total right and so that was something that i couldn't find on the internet at all it was really frustrating and i just really hoped that i had enough money to live off of and to pay whatever i'm gonna need to pay so i'm gonna share with you all um my you know my information on what it cost me hopefully that can give you guys some type of ballpark um for the same types of things so let's

look at money going out because you're going to want to think about this before you um really you know before you really press any buttons and press enter and take out money and and you know quit your job if you're doing that so so kind of do some pre-planning here what is what what are the finances that you need to live off of for your own personal uh reasons like your housing or your utilities and bills um savings if you have any sort of like monthly subscriptions that are um auto paid right i donate to charity quite frequently so that's something i like to also include and obviously your own taxes and then also on the business side

of things so um and we'll get more into this whole column for the business so um hang on for that but just sort of like an overview you'll see that there are filing and formation fees um services that you might need hardware software general supplies um labor like your own kind of your own work um again charity if that's something that you want to do with your organization and of course taxes so yes um more on the business stuff later or actually really soon um but just kind of an overview so let's look at your money situation how are you going to get money how is it how are you going to spend money and then the next

sort of like big thing that you should probably think about is your timing so for me as i said um i was employed and then i actually um you know painfully uh resigned from that position to focus on my own health and and bouncing back so um for me i kind of had to really think about the timing very carefully um and you're going to want to plan out like when is the best time to leave if there is a best time i finished a huge project for my organization um and wrapped that completely up before you know i pulled the trigger so to speak and i just felt like that was the right thing to do for me

and um you also might want to consider like do you have a goal of when you want to begin your actual work for clients um as well as chiming for finances right like if uh depending upon your money situation you might really need to start sooner than later or something like that so um you're going to want to also just kind of think related to timing about your your goals as it pertains to time so like when do you when would you like to make your announcement at least to your network or you know who it could be your friends or your family or it could be to the public right when are you going to want to announce

when do you want to have your first client solidified and you know the contract sign and then also again financially uh when do you need to have money coming in because that will also play a role in the timing um let's also touch on the third aspect that you're going to want to think about potentially if you're also in a similar situation which is the leaving aspect um and so as i mentioned you know for me i had quit a job and then i had some time to heal and then i was going to start on this journey to make my own company um so um let's let's dive into this more so like contracts really

for me and for a lot of other folks out there who have employment contracts and this is nothing like specifically to what i had but just in general this is kind of stuff that you could see so you might see you know contractual terms in your employment agreement about payments pay benefits um non-competition non-disclosure ownership of discoveries and uh maybe even governing law which basically just says where which state does your contract kind of like uh which state does your contract follow the laws of if you were looking at it in a legal way it would be pertaining to how let's say texas looks at those laws opposed to a different contract that was kind of like written

for governing law in like alabama would be different legal laws as it pertains to the contract so you might see those things too um and i guess you know the one thing i would really recommend is that you do uh consider getting an attorney to help look through your contract and your agreement and um especially just so you can understand any things that are binding that you have to consider like a lot of the non-competition non-disclosure that kind of stuff that will be you know anywhere from six to 24 months um that you're binded to that and so that is a very serious thing that you should you know um abide by obviously you're contractually

supposed to and um you're going to just want to understand also like potentially for your business what um what can you do what can you not do um and just kind of like get clarity on any gray areas that might exist so in a lot of cases maybe there's no really you know there's no reason for concern you're doing something totally different or you're providing a different service right so but i think it's a good thing to um to gain clarity on and i would highly recommend that anyone do that for me it was a great investment for me to seek my own legal counsel and so for example like if my contract were written governing law in nevada i would

have sought out an employment lawyer who had was able to practice in that state of nevada right so you're going to want to match whatever your contract says um so that's probably you know you know very important step that i would recommend in addition to the money situation the timing situation and then your sort of like legal situation right so i told you we would go back into the business expenses and so that's what i'm gonna do for you right now and then um sort of at the end you'll be able to see you know feel free to take a screenshot or whatever um what what we're dealing with here so um first thing filing and formation costs

so um just so you know a lot of people get a little bit worried about like oh what should i call my business and actually um you can change the name of your business at any time it's like a ten dollar fee to do that it's really not a big deal so don't freak out too much about that and like get caught up on that really um there's a simple little form you can you can file it's like i think it's ten dollars um so don't worry you can just call it you know ally's cool business and change it later like it's it's really fine um don't let that stop you and um there's a lot of confusion and a lot of

um i would say conflicting opinions especially on the internet of you know how should you file where sh what state should you file and um what several professionals have told me um is that it's actually you know not really worth it for a small business that is likely going to remain a small medium business to file in one of those friendly states like everyone always says delaware or um nevada or there's a couple other ones that are like popular so really the whole scenario behind that is um you know it's only really helpful if your company eventually is like going to go public or have stock you know or be an actual corporation um those protections

may at times help those types of companies but for myself i knew i wasn't going to do that just a little just below me maybe some employees eventually or something like that so everyone said no no just just file um you know somewhere that's convenient to you like where you live so just something to also consider um there's there's legal zoom you know services like that can that can help you through the filing formation process for your business um the one thing that i had found out was that um especially sorry legalzoom but um i had heard that you know some of the services that they bundled in were not actually necessary for what you need to

do and then actually kind of negatively sometimes you have to undo paperwork that was unnecessary in the beginning and undo that um and that can be you know costly time and money so i was kind of a little bit wary about that once i found that out um so i i decided to go with a friend that i knew um and an accounting firm that provided those business formation services um and you know that was a lot of there was a lot of trust there and a lot of personal relationships there so that was really great um also just real quick on tax classifications because this is something that's really important to you know the tax part of your business

um there's the sole proprietorship and that's really so like your taxes um with the business are basically considered like just whatever your personal tax situation is there's like not really a distinguishing um factor there so that's what a sole proprietorship is in terms of the tax classifications um the s corp um is basically like you'll see this word pass through um which basically means that if you have your business um taxes over here and then you have your personal taxes over here in an s corp tax classification your business taxes pass through your personal tax like bracket or situation so they're separate but when it comes down to it the business tax situation just goes through

to whatever your personal situation happens to be at that time um there's also you know kind of on a larger scale there's the c corp and um you know partnership tax classifications which you know i i wasn't involved with um but that's basically like a c corp would be your text on your business stuff plus you're also you know taxed on your personal stuff so instead of the pass-through where you're kind of like benefiting because you're only being taxed on like one situation because it passes through you would be taxed on both so um and then again for the sole proprietorship um there's really not even two it's just one so hopefully that makes sense feel free

to you know chat in any questions on that um let's see and then just so you know so an llc limited liability corporation um it's actually not a tax classification in and of itself it's a type of business and so if you decide to you know make an llc like i did you will also have to choose what type of tax classification you would like because it's not inherently uh one already so you'll kind of you know do both things um so that was interesting i didn't know that so i had chosen the s corp the pass-through um to complement my llc business status um also so this is kind of like some really good checklist stuff for you

and then hopefully when you are able to um you know receive a copy of this presentation or you can dm me or chat me i do have embedded links to these actual forms and resources in here again they might have changed or been updated but you'll be able to get a good sense for what's involved so um for me i wanted to you know protect my privacy and my personal information so i decided to get a virtual business address so that i wouldn't have to put my home address on any of these forms that some of them are public some of them aren't um and so that's something to consider especially if you're in you know

security um and then in order to do that you'll have to sort of like um allow that business to be able to take in your mail so there's a little form from the usps that you'll have to do and i think it's free to file but you do have to like give them authorization um there's also something in the filings like process where you can hire something called a registered agent and that person or some entity will register all of your paperwork and stuff on your behalf with their personal or you know their professional information so that uh you know you wouldn't have to file these official paperworks with your home address and your cell phone and things like that so those

are two um nice services that are totally optional but i decided to spring for those just to protect my own information um you'll have to get your employer identification number which is you know pretty simple process but there's a form for that you'll have to file your articles of organization which again um is kind of you know specific to an llc situation you'll have to um file if you're gonna sort of go about business with a different name than what um you're going to put in the paperwork so that's like doing business as dba you'll have to do that little form and i think that's the one that's 10 and then you'll also have to let the

government know what type of tax classification you actually want to to be you know seen as so there's a little form they have to fill out for that so for me is escort perform um and then i live is bad upset but i live in arlington virginia and so um arlington county or arlington city um also has like a little process that you have to go through to just sort of get your license uh your certificate of occupancy etc so um that was pretty easy to do i don't think it cost me anything just just a little bit of time um and again the blue ones are all um totally optional but ones that you know may be

recommended for your situation um and these are the costs right so this is should be hopefully really helpful um for me you know you can see 60 to 100 um monthly fee for having that virtual business address so i can use their address for everything their services and registered agent that was a one-time yeah that was a one-time fee um and you can see some of the filing paper fees um that go along with that okay and then oh this presentation is actually worth at least 450 because that's what i paid some professionals to help me through this process so you're welcome okay and we talked already about the expenses sort of money going out

and just want to quickly go touch on services so for services you might need those attorneys that i talked about sometimes i'll be depending upon where you are and their experience level you know 150 to 250 plus an hour um kind of pricey um so you just want to kind of you know budget for that um if you have accountants and payroll folks which i would highly recommend you get because i'm not a tax professional i don't want to mess that stuff up they range from like 50 for sort of the admin help to upwards of 200 if you're getting like the top person out there firm um for filing assistance again i told you that i had used that

accounting firm because they offered that as as a service and um i think that was actually um the 450 that i just told you about um you'll also want to consider your business insurance so don't forget this um there's largely three types of just like you know baseline insurance when you get into more specified types of work and services and products you'll have additional different like you know specific types but in general you'll have your general insurance your data breach insurance which we should all be semi familiar with what that is and also your professional insurance and so um annually that can range depending upon you know your your providers i actually i went through my sort of auto insurance

provider and they were able to hook me up with a really good um insurance provider that they work with um to get all this business insurance at a really good rate so that was also a good tip to maybe kind of ping who you are to use and see if you can get a good deal on that um if you have any questions about the insurance stuff happy to chat about it there's some distinctions between those um obviously if there's any technical or security services um luckily i'm able to tap some friends that i have to help me um and you know obviously some software that you might need too to run your business um i had an issue

with of course my dns getting that set up for my mail client and everything so um yeah so you'll probably need to have some type of resource for help with certain things like that if you don't already know it all yourself um and then other services you know your bank and your credit card services for your business right business bank business credit card um if you have if you're going to want to have any hr services i actually used to work for an association that you'll see this peo is linked and that's a professional employer organization and they kind of do like outsource hr so they're companies and they handle all your stuff and you can look into that if you have

any questions let me know because i used to work for them um and then you know marketing or administrative expenses right just kind of those ancillary things um oh also just be careful there are um sometimes minimum dollar amounts that you need to have in your bank account um so you don't well so you avoid any you know recurring business fees like just to have the accounts kind of silly but it happens um my bank minimum was like 500 which is kind of significant so or else i was going to incur a 20 fee every month so something to keep in mind i didn't know that um okay really quick on hardware obviously you know you're gonna want to

have some type of computer system um i ended up chatting with dell um on sort of the chat feature and had a really great experience with some of the folks over there who helped me get a custom quote on my laptop um and obviously there's a newer model available but that was something i didn't know you could do and it actually saved me quite a bit of money also took quite a bit of time not sure if it's because it was custom or because of the you know the crazy times operationally logistically but um keep that in mind too it could take some time to get your laptop software you should be familiar obviously you're going to need some type

of you know domain host um a website maybe your sort of email slash you know just data organization system right office 365 or google suite right there's other options and you can kind of decide what you want to do there um if you're going to do some accounting software you know something like quickbooks if you need professional software like your a professional linkedin account that's something to consider if you want to get the upgraded version of anything that's freemium like um like a web meeting service or something like that or you know if you need a creative software um so lots of stuff to consider and especially depending upon what you actually end up doing um

so this is kind of what it costs for me which was not too bad but um something to consider for our finances and um just really quick you know on labor so basically eventually you'll get into all of this um you know paying yourself a salary and if you have other employees um your own benefits and health care um if you want to do a 401k program you know your training budget if you want to have that conference attendance headshots i was able to get that for free because there was a program um sort of within the the coveted times that was really helpful they did free headshots um so you can kind of look for things

that pop up for that you know business cards equipment supplies licenses like there's a whole bunch of stuff um that can come up that you know you can you can be aware of so we're nearing the end here and we're going to do a quick running calling um total if hopefully you know my math checks out here but total it took me about four thousand seven hundred eighty four dollars to start up and that was over the course of i think about eight weeks because i took it very slow as i told you um and yeah it's over eight weeks and um so right now fast forward i actually have two companies um the one

that i started and then i joined another small business um and i'm a partner for that i have clients right now i have lots of good things going on um and i am one happy girl so uh i know that was a lot of information you know please feel free to chat me or dm me anytime i'd love to help you i'm already helping some friends in the industry um explore their own options and that makes me really happy because the one thing i knew before i even started any of these steps that i talked about the one thing i knew i said look if i can figure this out and get it all squared away

you know i'm going to take really good notes on my process and everything and i'm going to share this with everybody because i want everybody else to be able to have an opportunity to you know work for themselves or do their own thing or um you know just follow their own dream and so i knew from the get-go that i would be sharing this with you all and i look forward to sharing even more as i find out more steps of the journey here um so i've been in operation for you know september so i've been in operation for maybe a solid three or four months um at this point in time and i know i'm

gonna learn a lot more stuff um as the calendar year progresses and i you know incurred different types of experiences i've already learned a few other things um since i made the bulk of this presentation so maybe i have to keep updated on that and again if you have any questions please feel free to chat now or message me later more than happy to help out with anything that i can and i just really appreciate you all having me and thank you to besides charlotte and all the wonderful folks running this and i really hope that you all um you know show your appreciation for the immense effort that goes into this and i hope you take care i hope you um

are able to have a good rest of the year and thank you again