Rob & Melissa Stephenson from Flea Market Flipper interview Amira Irfan from A Self Guru about whether reseller businesses need to set up an LLC.
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Reseller Hangout Podcast – Interview With Amira Irfan
Rob: What's up, guys, today we are so excited to talk to Amira with A Self Guru. Very excited what she is going to chat with us today. So Amira, thanks for jumping on here and spending some time with us.
Melissa: And we're gonna dive into LLCs, so yeah.
Amira: Oh, awesome. Thank you guys for having me.
Melissa: So, Amira, you are a lawyer and you help small businesses, with LLCs, correct?
Amira: Correct.
Melissa: So if you, so that's what we wanna help everybody here at the summit. They're all, whether you're doing this as a hobby or you're doing this as, you know, as a side hustle or you wanna go full time, you're still doing, you're creating a business for yourself, so we wanna make sure that you are protected. So.
Rob: Absolutely. And you might be in the middle of your business, you might have already started your business and you want to make sure that you are in the proper place or you're getting ready to start your business wherever you're at. Amira's gonna help us to know what that next step is for you. So.
Melissa: Awesome.
So, Amira, if you can, we can start with, so what exactly is an LLC?
Amira: Absolutely. So LLC is one of the most common business structures. It stands for a limited liability company. It's the type of business structure for that really offers you personal, limited personal liability for your business debts and obligations and LLC can be owned bit by one or more people.
And some of the things about LLC is that it, as I mentioned, that it gives you that limited liability protection. It's really easy to manage. It has some tax benefits as well. The only negative thing about it is that you do have some paperwork that you have to take care of and you have to maintain your LLC.
So it's definitely one of the most, easily formed and, you know, business structures out there way better than sole proprietor.
Melissa: Okay, cool. You mentioned there's some tax, sorry, I didn't mean to cut you off some tax benefits. What would some of those be?
Amira: So that would really be for the, for the personal situation, varies for taxes from person to person.
So that would be more for a tax professional to advise you, right? Sometimes what happens is that you have an LLC, but your tax, you could be taxes and S corp to save more money on taxes, but it varies by the amount of income that you, your business generates, and that's where your accountant would be the best person to kind of advise you which entity you can choose. But LLC kind of gives you that flexibility. So you could be, for a legal, you could have the legal protection, the legal shield, where your personal assets are protected, but then for tax purposes, you could be, classified as a S corp, and then you reap those benefits too.
So that's where I mentioned that it's got that flexible structure.
Melissa: Okay.
Rob: Cool. So say I'm a reseller right now I'm selling stuff on eBay. I'm doing it as part-time. Do I need the LLC and is that the best place for me to start? What would you suggest?
Amira: So this is a great question. You have to think of the LLC, kind of like, the best way I can say it is like a car or home insurance, right?
So we buy a car or home insurance. Why? Because we want that added peace of mind. We want that security for ourselves in case of anything that goes wrong, any disasters, lawsuits. So LLC kind of gives you the same legal protection. So you have to ask yourself like, well, whatever is it that you're doing, what stage of your business you're at, and then if there is that risk that you are taking, then it's definitely a good idea to go ahead and add that layer of legal protection to your business. So this way, your personal assets, like your car, your home, your bank account, all of that. All of those are protected, and there's really not a right time for this.
Some people choose to not form the LLC right away because they want to foresee that if they even have a viable business or not. And then they go ahead and form once they see that, hey, there's some money coming in, now I wanna protect myself. And then some people are like more risk averse, so they'll go ahead and form the LLC from the get go.
It really comes down to your risk tolerance and preference.
Melissa: That's interesting.
Rob: Yeah, for sure.
Melissa: To think about it. So, so what, what kinds of things like say, you know, I'm starting out, I have this small business. What kinds of things does it protect you for? So is it like if somebody comes after your business for something and they can't go after your personal correct?
Is that how?
Amira: Correct. Correct. So as long as you maintain your LLC, that, that division. So LLC allows you the shield of protection, but it also comes with responsibilities like maintaining a separate bank account for your LLC, not commingling your personal and your business funds. So as long as you maintain that, you know, wall of separation, then the LLC allows you that limited liability protection.
So this way someone, let's say tomorrow you owe your business, owes any debt, or the business gets into a lawsuit or any other kind of legal issue. Then at least the person, well the business will be liable for all those debts and losses, but not you personally. So that's where, from a legal standpoint, the LLC comes into,, it really helps add that layer of protection.
Rob: Yeah, I like how you boil that down too, because for me, I mean, I don't know mumbo jumbo, I don't understand that portion of it. But it really boils down to, I relate to that when you say you have a car, you have a home, and you have insurance on those. If somebody, if you get in an accident instead of somebody coming after you, they're going for your insurance.
And that makes sense to me on the business. The same way the LLC is protecting your assets and it's coming after the LLC versus yourself. So I love that analogy for sure.
Amira: Yeah. I like to, I like to break it down in real world examples, right? So it just kind of resonates.
Rob: Absolutely.
Melissa: So the whole process of getting an LLC seems like that kind of stops people like, oh, it seems overwhelming. How do I even start? Like, is the process difficult and does it cost a lot of money? How does somebody get started?
Amira: Yeah, so actually filing the LLC is not as difficult as you might think, as long as you know what you're doing. So, you will need to submit certain documents with your state, pay an annual fee, also a filing fee.
And then as I mentioned, you have some legal obligations to have a separate bank account, not commingle your funds, your personal and your business. They'll keep it all separate as long as you kind of do these things correctly. It's actually not that hard to form an LLC. What you will have to do is you'll have to look at your, each state is different, so you'll look at your state requirements for filing the articles of organization having an LLC operating agreement, researching the name of the LLC.
So different steps, and I can go into it more detail, but those are the kind of things you would make sure to do. But if you're not comfortable, and I understand that some people are not, that's where you would work with a lawyer like me and I can do that paperwork for you. So this way you can have peace of mind knowing that it's all done correctly.
Or like I said, you could try to do it yourself by following your state's requirements.
Rob: Awesome.
Melissa: So usually you would find that on the state site. Is it the state government site?
Amira: Yeah, exactly. So it's usually the Secretary of State, like in Florida it's the Secretary of State's website. But if for any, particular state that you're in, you would just go to your state's website and then you would look at the LLC paperwork online.
You would look at the filing fees. You would look at what is it that you have to submit. And then you can most, most of the time do this online. And the each state has its own fee, right? So the fees will vary. It could be just $50, it could be a hundred dollars, it could be more. And then you would just submit all of that paperwork.
You would do the draft, the articles of organization. You would also have the LLC operating agreement, which kind of makes it clear as to how your LLC is being run. So once you do all of that stuff, you can submit that document. Like I said, most of the time, electronically.
Melissa: Okay. And what exactly is the article of organization like that you put together?
Amira: Yeah, so these are just your organization documents of the LLC. These are just the official, it's actually a form that you usually fill out. Your state will already have that for you, and then you can just fill it out. And then the operating agreement is really the more important one. Because that one, basically outlines in detail like how your LLC is being run, how it's gonna be managed, and if you have more than one member or manager of your LLC, then you will also put all of that information in the LLC operating agreement.
So this way both members or one or more members know exactly what they're bringing to the table. If they're making any financial contribution or if there are meetings every month or every year, you would put all of that information in the operating agreement, and that also serves as evidence that your LLC is indeed separate from your personal stuff.
If tomorrow you have to go to court or anything, court is gonna wanna look at your operating agreement.
Melissa: Okay.
Rob: Awesome. Follow up question too say I'm watching this right now and I've been flipping for the last six months or a year and I haven't had a LLC. Will I be penalized if I decide to go ahead and jump in and have you, or try and do it myself and get the LLC in play like today or tomorrow, whatever it is, will I be penalized for the business that I've done previously or anything like that?
Or how does that work?
Amira: Yeah, no, there's no penalty.
Rob: Okay.
Amira: It really just depends on whenever you are ready, right? Like if you feel like you are at that point where you're making some profit and it really makes sense for you to go ahead and get that legal protection, then go ahead and do it. There's no right or wrong time for it.
And there's no penalty for not doing it like six months before it's, it's really whenever you can do it. And, then the protection starts from that point.
Melissa: Awesome. Yeah. So we, if we get it all in play, in the first year and you get all this stuff done, what does it take to keep it active? How does that go?
Amira: Yeah, no, sorry, were you saying something?
Rob: No, I said good question. So how do you keep it up once you get it all filed?
Melissa: Is it hard to? Yeah.,
Amira: Yeah. No, absolutely. This is definitely a great question. So what you wanna do is once you file your LLC, you have to keep it active. If you wanna continue having that legal protection, limited liability protection.
So what you do is you basically file an annual report with your state's business filing. and you also submit a fee every year to maintain your LLC. And then let's say that something has changed over the years. Maybe there were two members of the LLC, but now it's just one member. So you're gonna update all of that information on an annual basis, letting your state's office know that, okay, they are up, you know, whenever you go ahead online to update and file the filing fee, I'll give you an option to go ahead and update if there's any change in the members or managers or even maybe your company's address or any other information. So you'll go ahead and do all of that. You'll pay the annual fee and that will basically make sure that your LLC stays active.
Rob: Okay. And if we do hire you or hire a professional to set up the LLC, is that something typically you guys will make sure that's done every year or is that something that falls back onto the business that they have to make sure they get all the paperwork in at, at a certain time every year to make sure it's up to date?
Amira: Got it. So typically it could be your accountant, right? Because they can, they can do this. I mean, yes, I could certainly do that, but we don't do that on an annual basis unless there's an arrangement, like there's a fee arrangement. And if that works then I'm happy to do it. But typically it's very easy to do.
You just hire the lawyer to form the LLC. But as far as the maintenance part of it goes, as I said, if there are no changes to the LLC structure in any way, no members, the same operating agreement, same everything, same address. Then it's very, very easy for you to just continue maintaining that on your own.
It literally takes five minutes for you to go online and just pay that fee and submit that paperwork online and do it yourself. It just doesn't make sense for you to kind of pay the lawyer to do that.
Rob: Okay.
Amira: I mean, you could, you could totally do that. I'm not gonna say no to that, but I'm just trying to say that that would be the most cost effective and efficient way of doing it.
Or as I mentioned, if you're working with a tax accountant, then your accountant is already doing all kinds of paperwork for you. So this might be one thing that they can do it for your, for you as well. I've seen a lot of accountants do this for their clients.
Rob: Awesome. Good to know.
Melissa: Yeah, I find cuz we have to do it every year and it's not, it's not that difficult. It's like a form. The biggest thing is remembering to do it, like putting it on the calendar. Like I get the messages to do it and I have to remember and that I don't, you know, miss it and then have to pay a fee later.
Amira: Yeah. Yeah. You'll be at, you'll pay a late fee penalty and all of that stuff. But usually your state will also send you some sort of a notice either by email if you have opted in for those, or they'll send you a letter to let you know that, hey, it's time for renewal.
So that's another thing to keep in mind.
Melissa: Yeah, I definitely have gotten those letters before. So gotta stay on top of it. I'm curious, I thought of this question, what about when you're naming your LLC, so does the name of the LLC have to do with a, like you have to name it the same thing as your eBay name, or does it cover, like, how do you go about naming it?
You have to research like what names are taken or anything?
Amira: Yeah, that's a great question. So what you will do is that when you're looking to start your LLC, whatever name that you wanna pick, you do a research on a state level. Now this is not the same as like federal level, the trademark or anything.
This is more like on a state level because this is a state level issue where you're filing the LLC. So you would want to go ahead and research and see that you are not filing in the name that is already in the database, right? So you wanna do some research to see that you're not infringing upon a name.
Let's say I'm A Self Guru, I don't wanna have let's say there's another A Self Guru in my particular state, then I don't want that particular name. You wanna, you wanna differentiate because then that could lead to some legal issues, infringement issues on a state level. So you wanna first do that research and then, as far as the name, it doesn't have to be the same name as your, business, like the eBay or anything else, or even your website, for example.
But it does help if it is, because that would eliminate the need to form called a dba, doing business as. So if you don't have, if your LLC is not the same name as what your business operating in, then you would be required to go ahead and form that additional document, which is called Doing Business as to let people know that, hey, even though my LLC name is.
I don't know, it could be anything, flea market for example, but I'm doing business as reseller, so then you would have flea market DBA reseller. That's kind of how it would work.
Rob: Okay, cool. Makes sense.
Melissa: Yeah. Might need to add something cuz your business name is a lot different. Would you do that as like, so say we had a couple different accounts like eBay accounts or different. Yeah, you would do 'em as different?
Amira: Yeah. So you could have multiple, Yeah, you could have multiple DBAs under one LLC if that's what you wanted to do. So you could have a parent LLC, and then you could have multiple different businesses as operating under that LLC with DBAs. But just keep in mind that when you do that, because you don't have that separation now, all the businesses, let's say you have two businesses under the same LLC doing DBAs, then keep in mind that you are taking the risk for both businesses. So if, God forbid, tomorrow one business gets into legal issue, they the money from the second business was also at risk because it's under the same LLC.
Melissa: Yeah, that makes sense.
Amira: So that's why people usually form different LLCs to keep each business separate.
Melissa: Okay, that makes sense.
Rob: Makes sense for sure.
Melissa: Cause we have two parts to our business, like we're doing the online portion, but then we also have the reseller portion. Yeah. So yeah, that makes a lot of sense. So, yeah. Something you said about having, you know, when you change, how many people are on there? Like, say you start with just yourself on, on the LLC, when you're adding somebody that's working with you, you're not talking about adding like employees or anything?
Amira: No, no, no.
Melissa: You're talking about like the only people who are in the business, like partners?
Amira: In the business, there's an actual ownership interest. Okay. Okay. Right. So like you and Rob, right? Yeah. I'm assuming like you both are the owners of the business. So then you would both be basically the members of the LLC, and I'm sure your contribution for each would be 50 50, or maybe you wanna only give Rob 35, right?
So , whatever, whatever it is, you wanna make it very clear in the operating agreement that, hey, I am the, you know, I'm the 65% and he's this or that. So whatever it is, you kind of wanna make it very clear in the operating agreement.
Rob: Cool.
Amira: That's where it comes on to.
Melissa: Okay. And where you, when we talked about the names, how do you go and look up the name on the state level? Is it, I know ours is Sunbiz, so is it just different for every?
Amira: Yeah, it's different for every state. Right. Okay. Because, yeah, ours is honestly, speaking one of the easiest states. So definitely like states like New York, I feel bad for because there's just, they just make things way more complicated than they need to.
Even California makes it really complicated. But you would just honestly have to do the research on a state level.
Melissa: Okay.
Amira: You have to research the state database to kind of see whether this name is available or not, and then in what industry, and so forth.
Melissa: And you mentioned that it, that doesn't, it's not the same thing as checking out a trademark, but would you have to look and see if something's trademarked too to make sure you're not, or does that not, or would it be wise to do that as well?
Amira: Yes. Yes. Exactly. Exactly. It would be wise to do that, especially in for, for trademark. What you wanna do is, it really matters is what industry that you're in. So, it comes down to the products and the services that you're selling, and then the name that you're researching on the federal level, which is the USPTO's website, you're gonna wanna make sure that their infringement only occurs if you and that person is competing in the same exact industry.
Melissa: Okay.
Amira: It's the same products and services. Just because you both have the same names doesn't mean that there's always gonna be an infringement if you both are operating in totally different industries. So, for example, Dove Chocolate, and Dove soap, ok. They both have the name Dove, but how do they get to operate in to, with the same exact name in two different industry is because there's no infringement.
One is in the chocolate, one is in the cosmetic, the soap. So that's how they can coexist. And another example, Delta faucets and Delta Airlines. So there's no infringement there once again, because in totally different industries. So that's another thing people always forget. They just right away assume that, oh my God, I have the same name as this other name and I must be, you know, now getting into legal trouble, not always the case.
There's a little bit more research needed to kind of see that what category or what class that these people have trademarked that particular name in. And then to see how it compares with your particular business, whether you are also competing for the same goods and services. If you are, then yes, there is that infringement, but if you're not, then you're in the clear.
Melissa: Okay, good to know.
That's good. I never even thought about that. Like Dove soap they can't get into the chocolate making business basically.
Amira: Not with that, not with that name, you know.
Melissa: That's interesting. It is to think about, I went and thought about that, so. Something else. I thought since we kind of got onto trademarks, LLCs and trademarks are completely different, right?
Amira: Yes. They're very different. LLC is a state level, trademark is like on the federal level. I mean, there's state level of trademark too, but federal level is really what really matters. Cause federal law trump's state law.
Melissa: Okay. And would somebody with a a small business, a reselling business, need a trademark?
Amira: Honestly, it depends. You, you know, if you feel like you've got a really good business and you are gonna be in that particular industry and you are afraid that somebody could tomorrow come in and infringe upon your particular business model and you could be, you know, you could be competing, then, you know, I would say that it really depends.
It depends on how much you're making. It depends on what industry you're in. If you feel like, okay, there is that threat and you want that additional legal protection, then yes, definitely you could go for the trademark, but then keep in mind that your trademark will be for that particular class. If tomorrow you wanna change things around and you don't wanna keep selling what you were selling, yeah, then you wasted that money.
So you do wanna be very sure first about what is it that you're selling and what is it that you're trademarking. Cuz remember, trademark is tied in with what you're selling whether it's products, whether it's services. So if you tomorrow decide to change that, then your trademark is kind of a waste, right?
Melissa: Yeah.
Amira: So you do need to kind of think about all these things first, because trademark is not, it's not as cheap as for an LLC it's definitely thousands of dollars. It's not something you wanna do on your own. So you wanna hire a lawyer for that. And then there's, you know, there's fees and it also takes a long time.
It takes like nine to 12 monhts for trademark registration to be completed. So you kind of wanna be very sure about your business model first, I would say. And then, yeah, if that's the route that you wanna take, then why not? You can go for that.
Rob: Good to know.
Melissa: So definitely not for the person starting out, but, but if you, if you have a framework that works and you wanna improve upon that, that could be worth it.
Rob: Absolutely.
Melissa: So, So yeah, that's interesting. We've been working on ours for a long time. We're waiting. We're waiting. Hopefully they go through soon. I think, so, oh, another good question is, so can I write off the cost of getting an LLC?
Amira: Yeah. That's the beautiful thing about all of these things, right? So yes, absolutely you can, cuz it's considered a business expense.
Melissa: Yeah.
Rob: Awesome.
Melissa: I think that's something that people don't realize sometimes and like, okay, well I can write this off, and like, yeah, it's your business. It's your business, that's the one beautiful thing about having a business is all the things that our business expenses.
Rob: Absolutely.
Amira: I know. Even when people sometimes will be like, well, you know, I don't wanna spend a few hundred dollars on these legal templates that you sell. I'm like, why not? This is like your business expense. Like, you know, anything you buy from me or any one on one work I do for you, again, all of that is deductible. So why would you not take advantage of that? You know?
Melissa: Yeah, yeah. Even continuing education in your field and stuff that you're trying to grow your business. That's why, I dunno, I love it.
Rob: Absolutely.
Melissa: That's a business expense for sure.
So is there anything that somebody would need to do to protect themselves legally? Like is LLC the best way to start out?
Anything else you can think of to add?
Amira: Yeah, yeah, absolutely. LLC is a definitely great way to start. If you have your own website, then you guys already know, then you would need to have legal documents on your website to make sure that your site is also legally compliant. For example, a privacy policy is legally required on your website.
You also wanna have terms and conditions on your website just to kind of outline your refund exchange policies. Also, what are your website rules? Protect your intellectual property so that people don't steal your content. You also need disclaimers, so this way you can limit your legal liability for the content that you're publishing.
And then if you are kind of selling on these websites like eBay, then you also wanna make sure that you follow those, their terms and conditions, right, so that you're doing things properly and you're following their guidelines. Also in business, your reputation is everything. So I think it's really the key to a successful, you know, business selling online is just maintaining a good reputation.
You wanna be very honest and clear with your descriptions, the things that you're selling, whether it's on your website or whether it's outside of your website on platforms like eBay, you just wanna make sure that you are very clear about outlining your refund policy, your product descriptions, complying with the platforms, requirements, and just kind of responding proper promptly to the buyers and customers and all of that.
Melissa: Right. Good. So basically, if I'm selling my stuff on my own website, that's when I'd have to have those privacy agreements and disclaimers. But if I'm selling on a platform like eBay takes care of that, I just have to follow their, yeah, in their terms and conditions, their guidelines.
Amira: So yeah, you have to follow their terms and conditions.
But let's say you do have anything specific of your own that you're adding, like maybe a return by within only this period or whatever you. Still make it very clear in your product description, so this way, people are clear about your policy too, if there's anything particular or peculiar that you are adding.
Melissa: Yeah.
Awesome. Yeah, Good to know. Did you have anything, a download or that you wanted to give to the people watching today?
Amira: Yeah, absolutely. So I would love to give my free legal book, it's an ebook of 23 Legal Mistakes to Avoid in your Business. I do know from firsthand that legal mistakes can be very, very costly.
They can be very time consuming and a very devastating experience because before I became a lawyer, unfortunately, I watched my dad's business get sued for $90,000. So I know firsthand how it feels to go through the legal nightmare. And so that's why I became a lawyer so I could help entrepreneurs, legally protect their businesses affordably.
And I have put together this ebook, which will kind of guide you through all kinds of different legal issues that you don't think about, but you should in this ebook. And I would love for you to download and reach out if you have any questions.
Melissa: Awesome.
Rob: Awesome. You guys heard it. Grab the download. You guys want to know in your business what you need to be looking out for, for sure. So.
Melissa: I, I love though that you took something that was an unfortunate circumstance and then you wanted to, like what happened with your dad and then turned it and learned everything you could so you could help other people like that. It's huge. Like you turned those bad situations into something that can help other people.
Amira: So yeah, I mean, that became my life purpose, right? Yeah. Like sometimes I think sometimes things happen, but they're like a blessing in disguise and so there's a higher purpose. There's a bigger meaning behind them.
Melissa: Yeah. Awesome. And where can everybody find you? Where's the best place to hang out and learn more about you?
Amira: Yeah, so a couple places. First is my website, obviously ASelfGuru.com. You're welcome to check out the blog posts and reach out from there. The second thing is that my, I'm currently focusing on YouTube, so I am publishing more videos and helpful content over there. So I would love for you to subscribe and reach out to me, over there.
Melissa: Awesome.
Rob: Awesome.
Melissa: We'll put those links below too.
Rob: Thank you. Thank you. Thank you so much for jumping on here, giving us some great, great tips and information. Greatly appreciate your time, so thanks again.
Amira: Thank you so much guys.