[00:00:00] Quick question. Has this podcast helped you or your business in any way? If yes, could you please share it with a friend or another creative in your life? Be it through an Instagram story, a Twitter post, a DM, whatever you prefer. My mission here is to help as many creative entrepreneurs as I can out there.
And I can't do this without your help. Thanks for your time. And let's get into today's episode. Okay. Today, we're talking about a part of your business that is essential, but very few people talk about this. LLCs, business bank accounts, EINs, and payment processors can all sound intimidating, especially for us creatives.
Today, I want to break it all down and make it super simple that even a fifth grader can understand this. This is a simple three step framework. If you're listening to this, I know that you're a passionate photographer or videographer or designer eager to start earning money with your camera, or maybe you're already making money, but you don't have the proper business structures in place.
If the thought of setting up a business can easily feel overwhelming this episodes for you. There's a lot of bureaucracy and endless to do lists when [00:01:00] setting things up, but it doesn't have to be that way. In today's episode, I'm demystifying the entire process and walking you through the non negotiable steps you need to take to set up your business the right way.
Let's turn your creative business idea into reality. Welcome to the creative biz launch podcast, where we talk about how to grow your creative business and scale it to six figures, whether you're a photographer, filmmaker, or designer. You'll find something of value here. Now, before we really dive into this, I have to preface this by saying, I'm not a lawyer.
This is not legal advice. I'm not an accountant or tax expert. Nothing in this video is legal or financial advice. This is my experience. As creatives, it's frustrating trying to find. Anything about starting your business online. The big YouTubers don't want to talk about this stuff and there's very little information online.
So I'm here to show you the ropes. Imagine having the proper business structure set up from the very start so that you don't have to go back and correct things down the road. Do you want to know the three non negotiables you need? Do you wish you knew how to set up your LLC the right way? [00:02:00] Well, today I'm going to be walking you through all of this.
How about actually collecting money from clients? How do we set up a payment processor and make sure that we're not getting screwed with their fees? When I first started making my first dollars from photography, like most people, I sold a handful of prints. I was selling prints. I had these beautiful photographs of Chicago and people seemed to love them.
So I set up a simple website with a store and got a few sales. I made a few hundred bucks here. And magically, that money ended up in my personal banking account, and I felt good. Little did I know, I was operating as a sole proprietor. This was my first mistake here. I mixed my business income with my personal income.
And even worse, my business was tied to me. It wasn't a separate entity. Only a few months down the road did I actually take the right steps to setting up my business. While I was operating as a sole proprietor, I was at risk since there was no legal distinction between myself and my business. If my business were to get sued or something, they could go after everything I own.
And this is very bad[00:03:00]
when we're selling our services or our physical products like prints and that money as ending up in our personal bank accounts, we're operating as sole proprietors. So let's walk through the proper way to set up our businesses. So we're not. A sole proprietors anymore. So step one in this business setup process is going to be forming a single member LLC.
Why? Well, once we form a single member LLC, then our business and our personal assets become two separate things. There's our business that lives over here and our personal assets that live all the way over there. As long as we don't mix the two, if your business were to get sued, they could only go after your business assets and not your personal assets.
Now, there's a few caveats here, but as long as you follow all the LLC guidelines and don't mix your finances, you should be good.
When we file for an LLC, we also need to get ourselves an EIN. EIN stands for Employer Identification Number. Basically, this is like a social security number for your business. With an EIN... Your business finances can be separate from your personal finances. So this [00:04:00] means when we open up our business bank accounts and our payment processors, we'll be able to use our EIN.
We'll get into those in a second here. Now, at this point, I hope that you recognize the importance of forming an LLC. So how do we actually go about? this and form one. Each state has varying rules, depending on how to form an LLC. And each state also has their own fees associated with LLC formation.
Option one is that you go to your state's website, follow those instructions and form it yourself. If you decide to do it yourself, you'll have to perform tasks every single year to ensure that you stay compliant with a state or else you're at at risk for your LLC actually getting dissolved. I don't recommend doing this yourself.
It's going to be a waste of time. And it's going to be way riskier unless you know what you're doing. Option two is what I did. It's to pay someone to do it for you. You can hire a lawyer or use a service online. I prefer to use better legal. com. It's super cheap to get your stuff set up this way. And I'm a big fan of their services.
These days, there's a lot of different websites that offer do this for you. [00:05:00] So just do your research before going with a particular one, but I've already given you my recommendation. So take that. As you will, okay, so if we go have option two or whatever service we decide to use, they're going to take care of all the annoying paperwork.
They'll send us our articles of organization. They'll create an operating agreement and you'll get a registered agent. If you don't know what these things are, then that's further proof that you should be using a service rather than doing it yourself. So once you get that LLC set up, it's going to take about a week or two to get your LLC formation documents back.
But once you get those back, it's time for step number two.
So just to reiterate, step number one was forming the LLC. So that our business is a separate entity from us. That was our goal here. Step two is getting our financials set up. Let's get our business bank account set up. We need to get a business bank account because we need to put the money our clients are giving us somewhere.
Sounds simple, but I just need to state that fact. When a client pays us a thousand bucks for our service, that goes into our business account. If we need to spend a hundred bucks on some software for our business, [00:06:00] that comes out of our business bank account. All of our business transactions, both income and expenses, need to be going through our business bank account.
This will allow us to do two things. One, it's going to keep ourselves separate from our allies. I'll see, which is super important in case you get sued. And number two, it's going to make accounting and bookkeeping way easier because our business expenses are separate and we don't have to sort through our personal expenses.
When we're looking for those business ones, it's going to make bookkeeping way easier. If you don't have to sort through all those transactions, it's going to be a breeze to categorize your expenses here. Our business bank accounts only have business transactions, so it's easy to categorize them and pay the taxes.
We need to. Okay. So how do we set up our business bank accounts? Well, we need that EIN that we got when we formed our LLC. Remember that that's your identification number for your business. You need to take that EIN to the bank along with your other LLC documents, like your articles of organization. Some banks require different documents.
So just be sure to check with them and figure out exactly what you need. [00:07:00] When I did this myself, I had to go in person, but maybe you're able to do this online these days. Anyways, once you get that business account set up. It might be a good idea to also get a business credit card there. Most business credit cards give you 12 months of zero interest and that can be a game changer for a lot of you.
That means you guys actually have an interest free loan for 12 months that you can invest into things that will make your business money. Maybe that's a new camera, maybe it's advertising, maybe it's education or hiring a business coach. Whatever it is, it can be an investment. Towards your business here, once you've got those accounts set up, it's time to move on to step number three of our three step framework.
We've got the LLC, which makes us a legitimate business. We've got those business bank accounts. Now let's give ourselves a way to put money into that business checking account. Step three is to get a payment processor. A payment processor pretty much gives you a way to charge your clients. The payment processor handles the transactions, and I'll give you an example here.
So let's say your client wants to pay with their credit card. The client types in their card info into your payment processor. The [00:08:00] payment processor validates that info, and they charge the client. And then the money appears in your bank account in a couple business days. Super simple, but it's something that we have to set up.
Clients can pay for your service with their credit card, PayPal, bank account. There's a lot of options here. When you go get coffee and they flip the iPad around and charge you, they're using a payment processor. Same idea for your service. Some popular options here are PayPal, Stripe, and QuickBooks. All these are great, and I personally use Stripe these days since it's the simplest.
Once you've got that set up, you can send invoices through there and the client can pay that invoice through that payment processor. It makes you look a lot more professional. So please don't be using Venmo or something like that to charge your clients, get a proper payment processor set up. So let's say you want to set up a Stripe account as your processor.
You'll simply go to stripe. com. I draw the details they asked for, and you're good to go. Remember for this, you will need your EIN and your business bank account. So set up those things first before going into the payment processor route. So at this point, [00:09:00] we're done with our three step framework. We've got the LLC, we've got the business bank accounts, and we have a payment processor.
These are the essentials to actually start collecting money the right way as a business owner, as a creative business owner, we have everything we need to start to, we need to start making money in our business, right? If you wanted to, and I don't recommend this, you could potentially just run your business with one of these things.
You can technically. Just have a Stripe payment link. And through that you can collect money again. I don't recommend this, but bare bones, that is an option here. But then again, you're going to be mixing your business and personal income, which is not a good idea.
So with these three steps, we've broken through the myth that it's extremely hard to start your business. It's not all we need is a three step framework. And we're going to be able to collect money the legitimate way. As a business owner,
we've got our LLC and EIN. We've got the business bank account and that payment processor. And we're starting on the right foot. Now I didn't go over other business basics like insurance, but keeping another [00:10:00] dozen other things you should be doing. That will be in a later episode, or if you want to skip ahead, we teach all that inside of Creative Biz Launch.
Once again, I am not a lawyer or a financial expert. None of this is legal or financial advice. This is just my experience. My name is Chris Pieta. Thank you for listening, and I'll catch you in the next episode.
