Is it a Good Idea to Form an LLC While Working for Another Company?

Is it a Good Idea to Form an LLC While Working for Another Company?

Sure, it would be great if you could drop everything and invest yourself 100% into your dream business. Unfortunately, that isn’t always an option. The world keeps turning and bills must still be paid no matter how high your ambitions and brilliant your ideas might be. Or maybe you want to turn your hobby from a simple pastime into a commission-based business for a little extra cash on the side. In either case, an LLC is an ideal business structure for those interested in testing out their entrepreneurial skills. But is it smart to form an LLC while working for someone else? Can your boss retaliate? Let’s get into it below.

Florida State LLC Laws

The State of Florida does not look into whether you’re working for someone when evaluating your application to form an LLC. This means that your employment status at the time of business formation is completely irrelevant. However, you should still double check that you have all of the required paperwork and have followed all the correct procedures as dictated by Florida State Law.

Employment Contract

Before you form an LLC while working for someone else, you need to review your employer’s employment policies as well as any employment or job contracts for any rules or regulations for employees running side businesses. Usually, the conflict here comes from creative content, inventions, or innovations developed on your employer’s time and using their resources. Also, keep an eye out for non-compete agreements if you’re wanting to break into the same industry.

Telling Your Employer

Most of us grew up being told that honesty is the best policy, but is it really? There are no hard and fast rules when it comes to telling your employer about your side business. You will have to make your best judgement call based on the relationship you have with your employer. In a best-case scenario, your new venture might provide goods or services that your current employer needs, instantly transforming them into a new – maybe even your first! – customer.

Of course, we’ve all had bosses that we knew we couldn’t trust to be our allies or those who we didn’t know well enough to get a read on. These are the situations where you will want to exercise caution. It’s possible that if they find out, they might assume that you lack commitment to your day job or that you will use the company’s resources to further your own goals.

Taxes

You’ll have two options when it comes to how your LLC is taxed. The first involves filing as either an S-Corporation or a C-Corporation, which allows your LLC to pay its taxes as a separate entity with its own corporate tax rate. However, if you have decided against having your LLC taxed as a corporation, you will need to report your LLC’s income on your own personal tax returns. A general overview of LLC taxes can be found here.

So, Your Boss Is Cool with Your Side Business. Now What?

First, you’ll want to hop on over to our blog on what you can expect running an LLC to be like here. However, you’ll primarily need to focus on compartmentalization. Working on company time is just as bad as goofing off in your employer’s eyes, if not worse. By this same logic, you shouldn’t use your employer’s equipment or resources for your own purposes. Not only is this essentially stealing, it can also lead to undesirable consequences.

Time management is another skill that will factor into your success. Investing in yourself while working will take time out of other areas of your life. Sure, you’ll need to make some sacrifices, but taking care of all that hard work now will take you that much further in the future.

Looking to start a business or grow your current business? Contact FL Patel Law today by visiting our website or calling 727-279-5037.