I Don't Need an LLC

As a business and corporate attorney, I have the opportunity to speak with business owners every day and act as general counsel to businesses. Most of my work is advising businesses on their daily operations, make sure that they do not make any mistakes from a legal perspective, and even providing business consulting regarding their operations so that their businesses can grow into the future and fulfill the vision that they have for themselves, their company, and their employees.

However, I also speak with business owners in the startup phase and businesses who have been in operation for several years.

I am constantly surprised when these business owners tell me …

“I don’t need an LLC and I don’t need to incorporate.”

Perhaps they heard this from a friend, family member, or colleague who operated their own business for several years. This is one of the biggest, most expensive, and most common mistakes that I see business owners make in the operation of their business.

I recently had the opportunity to represent a business who was being sued by a vendor. This business operated as a sole proprietorship. Underneath, this business was nearly insolvent. The lawsuit was also very one-sided, and this business ended up paying $35,000 to settle this lawsuit. If this business didn’t pay, and simply filed bankruptcy, they still would have had to pay due to the designation as a sole-proprietorship. The reason? When you have a sole proprietorship, all of your personal assets can be seized to repay any business debt. There is no distinction!

There are many other ways that can damage a business by failing to establish an LLC or corporation:

  • You Can Be Held Personally Liable for the Debts and Lawsuits of the Business


  • If You Have Business Partners, the Lack of an LLC or Corporation, and Corresponding Operating Agreement Can Make It Very Difficult and Expensive to Resolve Should a Dispute Arise


  • If You Intend on Asking for Investment Capital in the Future, Not Having an LLC or Corporation Can Make It Very Difficult to Secure Investment Capital


There are also a number of other issues that can develop with a business other than just establishing an LLC or corporation including:

  • Are You Paying Too Much in Taxes?


  • Is the Name of Your Business and the Name of Any Products Protected?


  • Navigating Issues with Employees and Employee Policies/Handbooks


  • Are Your Contracts and Leases Being Reviewed to Determine They Are in Fact in Your Best Interest from Both Legal and Business Perspectives?


  • Are You Following Corporate Formalities by Holding Company Meetings and Recording Your Minutes? (Failure to Follow Corporate Formalities Is One of the Ways Business Owners Are Held Personally Liable)


  • Are You Handling Business Disputes with Customers and Vendors Yourself or Retaining Counsel First? (When You Try to Handle These, Often Emotional Disputes Yourself First, You Can Say or Do Something That Will Be Used Against You Later)


  • What Protections Do You Have to Prevent Your Employees from Taking Your Information and Opening Up a Competing Business?


  • Are You Doing Anything Online or Selling Any Products/Services Online that Could Open You Up to Action by the Federal Trade Commission (FTC)


  • Do the Federal Securities Law Apply to Your Business? (The Answer May Surprise You)!


  • And Much, Much More!


When I am speaking with a business owner from inception to growth to sale, these are the typical issues that we handle on a daily basis. What we have found over the years is that business do benefit from having an ongoing relationship with our office by hiring us as the General Corporate Counsel.

When you are starting a business, the best advice I can give you is to make sure everything is set up correctly in the beginning. Oftentimes a little due diligence and expense in the beginning will prevent a very large and expensive mistake in the future.

If you are a Tennessee business owner or thinking about starting your own business, please give us a call at (615) 472-2482 or fill out the contact form to the left of your screen to schedule an initial strategy session to discuss how we can make your business legally sound and be your general outside legal counsel.

Daniel A. Perry
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Focused on helping seniors, individuals with disabilities and small business owners make informed decisions.
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