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What Is an LLC—and Should You Create One?

  • Writer: Avery Medved
    Avery Medved
  • Jun 29
  • 3 min read

As a young entrepreneur, turning your passion into a real business can be exciting—and a little overwhelming. You may have heard terms like "sole proprietorship," "corporation," or "LLC" and wondered, Do I need to do something official with my business?

One of the most common questions new business owners ask is:Should I form an LLC?

The answer depends on your goals, the kind of business you're running, and how far along you are in your journey. This post will help you understand what an LLC is and whether it’s the right step for you.

Close-up of a person in business attire typing on a laptop keyboard, with the screen slightly open and reflecting a colorful circular logo. A pair of eyeglasses and blurred documents are visible in the background, suggesting a focused work or study environment.

Understand What an LLC Is

LLC stands for Limited Liability Company. It’s a type of legal structure that officially separates your business from your personal life. That means if your business gets sued or goes into debt, your personal belongings (like your savings or laptop) are usually protected.

Creating an LLC is like drawing a clear line between you and your business. It tells the world: “This isn’t just a hobby—it’s a real company.”


This is especially helpful if your business deals with customers, handles money, or could involve any risk. It’s a way to protect yourself while still doing what you love.


Know the Benefits of Forming an LLC

Creating an LLC comes with some great benefits:

  • Personal protection: Your personal finances stay safe if your business runs into legal or financial trouble.

  • Credibility: “LLC” after your business name can make you look more official to customers, partners, and even investors.

  • Flexibility: You can run your business solo or with others, and choose how it’s taxed.

  • Long-term potential: It’s easier to grow, hire people, or get funding when your business is legally established.


For teen entrepreneurs, forming an LLC might also be a way to show the world (and yourself!) that you’re serious about what you're building.


Think About Whether You Need an LLC Right Now

Not every young business needs an LLC—especially if you’re just getting started.

Ask yourself these questions:

  • Am I making regular income from my business?

  • Is there any chance someone could sue me?

  • Am I working with customers or clients I don’t personally know?

  • Do I want to grow or raise money in the future?


If you answered “yes” to one or more, it might be time to consider forming an LLC. But if you're still in the early stages—selling a few products here and there or testing out your idea—it's okay to wait.


Understand the Steps to Create an LLC

Forming an LLC isn’t as complicated as it might seem. Here’s a basic breakdown:

  1. Pick a business name that no one else is using in your state.

  2. File Articles of Organization with your state government. This is an official form that says you're starting an LLC.

  3. Pay a fee (usually between $50 and $150 depending on your state).

  4. Get an EIN (Employer Identification Number) from the IRS so you can pay taxes or open a business bank account.

  5. Create an Operating Agreement (in some states)—this outlines how your business will run.

  6. Check your state’s rules to make sure you stay in good standing.


📌 Important: If you’re under 18, you may need a parent or guardian to help you with some of these steps, depending on your state laws.


Talk to a Trusted Adult or Mentor

Business decisions—especially legal ones—are a lot easier when you have someone to help guide you. Talk to a teacher, parent, or business mentor who can help you decide if forming an LLC makes sense for you.


Some communities offer free legal help or small business support programs for young entrepreneurs. Don’t be afraid to ask questions—it’s how you grow.


You Can Always Start Simple

Remember: you don’t have to do everything all at once. Many successful businesses started out small and became official over time. It’s okay to begin as a sole proprietor (that just means you’re operating as yourself), then switch to an LLC when the time is right. The most important thing is that you’re learning, building, and growing—that’s already a huge accomplishment.


Conclusion

Forming an LLC is a powerful step in your business journey, but it’s not one you have to take on day one. Learn what it means, think about your goals, and talk to trusted adults before making a decision.


Whether you choose to form an LLC now or later, the fact that you're asking these questions means you're on the right path. You're building something real, and you’re taking yourself seriously—and that is what makes a great business leader. You’ve got this.

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