There’s a new wave of businesses that don’t look or act like businesses. The Instagrammable ones that seem to care more about following a TikTok trend and appealing to the Gen Zs and below.

They sell handmade jewellery on Instagram. They run faceless TikTok brands that push lifestyle over logistics. Some are drop-shippers. Some are digital artists. Some are teen CEOs who figured out Canva before they learned algebra (who understands Algebra anyway?).

They don’t wear suits. They don’t write press releases. They don’t follow the rules that older generations thought were non-negotiable. But they’re doing better than most traditional business models could ever dream of.

Their downfall? They’re not the best at the boring side of business. They can create a TikTok video that gets 1 million views, but they don’t understand how to be a limited liability company (LLC). And they don’t understand when to be one.

If this is you, read on for everything your stylish startup should know before becoming an LLC.

LLCs, Partnerships, and Sole Proprietorships Explained

The first error you’ll make is understanding when you’re an LLC, in a partnership, or a sole proprietorship.

A sole proprietorship is the default setting. If you start selling clothes or editing videos and you don’t register anything, that’s what you are. It’s easy. It’s free. But it also means if someone sues you or your product causes damage, lawyers come for your personal assets.

A partnership is two or more people doing business together. If your brand is a duo and you haven’t filed anything official, you’re probably in one. This one isn’t that complicated.

Then there’s the LLC. It sounds boring, but it’s actually what most startups grow into. It gives your business a bit of formality without turning it into a giant corporation. You still get to run it your way, but with a legal layer between your personal life and your business decisions.

What to Know Before Becoming an LLC

Before you file that paperwork, there are a few things you should know.

First, an LLC isn’t magic. You don’t get automatic protection if you still mix your personal and business money. You have to separate your accounts. You have to treat it like a real business, even if you’re still running it from your phone.

Second, you’ll need to decide who owns what. Even if you’re a solo founder, you have to choose how you’ll be taxed. You might file as a sole proprietor for taxes, or as an S-corp if you’re making real income and want to lower your tax burden. It depends on how your revenue is coming in.

Third—and this is a big one. You should think about LLC insurance. This kind of policy protects you from lawsuits, damaged shipments, or accidents tied to your product or service.

How to Register as an LLC

Here’s an easy step-by-step guide to registering as an LLC:

Step 1: Choose a Name

Always check if someone else has trademarked the name you want. You can do this on the United States Patent and Trademark Office website.

Step 2: Pick a Registered Agent

You can be your own agent, but it’s sometimes better to hire one. You’ll soon find you don’t have the time to manage it.

Step 3: File the Paperwork

It’s called “Articles of Organization” or “Certificate of Formation,” depending on your state. It usually costs between $50 and $300.

Step 4: Write an Operating Agreement

Some states don’t require this. We recommend you do it anyway. It outlines how your business runs, especially if there’s more than one founder.

Step 5: Get an EIN

This is like a Social Security number for your business. You’ll need it to open a business bank account or hire people. It’s free from the IRS.

Step 6: Separate Everything

Open a business account. Use business-only apps. Don’t use your personal Venmo for sales anymore.

You can still run your business from a studio apartment as an LLC. But now you’ve got protection, structure, and a better shot at long-term success.