312 - Stop paying for bullshit (again)
On today's episode of the podcast I'm back with another episode of what bullshit business owners can stop paying for. I make a new episode with this topic every time I hear about new BS people are spending their money on and we've got some good ones today.
1. Over-priced registered agent services
I recently saw a Facebook post where someone said they were auto-charged by an online legal service for their annual registered agent service because they used one of these services to file their LLC. What these services do for you as your registered agent? Beats me. The purpose of a registered agent is to receive service of process for you if you're ever sued which you can do yourself. Your registered agent also sometimes gets important mail and documentation like a renewal or reminder to pay your franchise tax. But I don't see a lot of benefit in that because I think you're better off being your own RA, getting your own mail and keeping your own compliance calendar so nothing falls through the cracks. You're the CEO of your business and fully responsible for these things.
The time you want or need a RA is if you file a RA is if you form an LLC in a state you don't live, which we don't normally recommend. Maybe you temporarily moved or you're a digital nomad, you need a RA in the state you are filed. But there are places to do this for $50-$100 a year, much cheaper than $300 that's not getting you much.
2. I recently worked with someone who got a bill for around $3,500 from the state of California for past-due franchise taxes. What happened was she formed her LLC on Legal Zoom, she wasn't aware she needed to pay her annual $800 franchise tax and when she didn't pay it for a few years, her bank account ended up getting levied by the state due to franchise taxes. We've had this situation with other clients who have had their LLC dissolved for not paying franchise tax. This is why I recommend filing yourself. IT can be tricky, but this is why I recommend getting a helping hand. While I may be biased because we sell programs to help you answer these issues, it's because we've seen them needing to be answered. We teach you what to do, how to do it correctly, and what you need to do after the fact to make sure your LLC doesn't get dissolved your bank account levied.
3. You also have to be careful about spam. After you file your LLC you're inevitably going to get a lot of spam letters trying to get you to buy things or pay for things. The most popular one is for labor law posters like you'd see in an office break room. They are legally required but it's vague and that employees have to have easy access to them and you can get them for free through your state website and print them. In my case, we have them in a Google Drive because we have employees all over. We see a similar thing when we file trademarks for people. People get letters about registered their TM on a website they don't need to for $1500.
4. Don't form your S Corp too early. Forming one costs you money, it doesn't save you money until you're able to put yourself on payroll, pay yourself a reasonable salary consistently, and still have profit left over. Most people should not form an S Corp in their first year of business unless you're certain you're going to have a full work load with significant profit, like maybe you're leaving a job and bringing a full client roster with you right out the gate.
5. Overhyped deductions. If you don't need it, don't buy it.
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