There’s a common misconception amongst the creative entrepreneur community and it’s high time to set the record straight.

You’ve probably heard it.

You may have even whispered it to a fellow creative because you unequivocally believed it to be true.

For some reason, you’ve believed that since your business isn’t big yet, or since you are just taking clients here and there, or because you’ve only sold your [insert cool thing] to a few people that you don’t need to formally set up a business.

So what if you are only:

Doing graphic design projects from time to time.

Researching and writing grants on occasion.

Writing website content when you feel like it.

Ghost blogging or writing for someone because it’s fun.

The statement that you don’t need to formalize your business now is absolutely untrue.

The number one reason for setting up a formal business structure is not just so you can wear some imaginary badge of honor and puff out your chest because you took care of the legal “stuff.”


It’s way more of a big deal than that.

The number one reason why you should set up a formal business structure is so you can protect your personal assets from liability.

In other words, if something goes down while you’re doing business you’re personal assets cannot be touched. Your personal assets include things like your house, car, checking account, retirement account and more.

See, no one ever expects for things to fall apart. In fact, it’s probably unhealthy to walk around presuming the sky will fall… at any given moment. Who wants to live like that?

And because no one expects for things to fall apart we tend to also ignore the possibility that it could. Running your business without a formal business entity is like running your business on a wild card. You never know when you’ll have a disgruntled customer or client because if it were up to you, everyone would love every single thing that you did.

But, it’s not up to you.

Just like you…

Lock your doors when you get home at night to make sure your family is protected….

Keep your money in the bank to safeguard it in a trusted place…

Have automobile insurance to protect your car in the event you are in an accident or it’s broken into…

Have home owner’s insurance to protect the contents of your home…

Purchase warranties for your large electronics and appliances…

You need to protect everything you (and your spouse) have worked for by setting up a formal and legit business entity.

Not only does setting up a formal business entity protect your personal assets but not setting it up is keeping you from playing big. Can you go after large opportunities as a sole proprietor? Absolutely. But, I can tell you that many sole proprietor, creative entrepreneurs choose to play small. Not because they don’t want to achieve more, but because they know deep down inside that the legal “stuff” is more important than they like to admit. The idea of entering partnerships and deals with others makes them nervous because this one thing is missing and they become nervous about what could happen.

That’s no way to spend your energy, dear genius. You’ve got better things to do.

Even if you are launching a business while working this public service announcement applies to you.

It’s tricky business building a dream gig while working. So, you need to keep those personal assets completely separate. You’ll work this important step into your quit plan and take care of it when the time is right.

Do you want to chat about working with me on your business? Let’s do it.

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