I've had some frightening conversations lately with people who want to start a business. One of the most disturbing trends I've seen is people who are in essence starting their business backwards. That is, they refuse to protect themselves in the proper way because their business isn't "making any money yet." Let me tell you, liability doesn't wait for you to make money.
I get several calls a week from people who inquire about setting up an LLC or other entity to shield themselves from potential liability. Great idea, right? Except at the end of the conversation, the business owner tells me they're not going to set up an LLC or get business insurance yet because their business is not yet "making any money." Listen people, anyone that thinks they are going to start a business without spending any money should probably not start a business. Even a service-based business where you work from home is going to require some money. Certain business expenses should not wait until the business is profitable. If you are doing some due diligence or proof of concept and trying to determine if a business idea is viable, obviously don't start spending tons of money setting up corporate entities and buying insurance, but if you are in a business your liability exposure will not wait for you to make money.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way.