EntreLeadership - Here’s Why LLCs are a Waste of Time

Episode Date: September 18, 2026

📝 Shape what comes next for the EntreLeadership® show by participating in our 2026 audience study. After you complete the survey, you can enter for a chance to win a Standard ticket to EntreLeadership Summit 2027.   An LLC can provide important protections, but it won’t build a successful business for you. In this episode, head coach John Felkins addresses three common myths about LLCs and explains what business owners should focus on before worrying about their legal structure.   Next Steps: ·      🤝 Connect with tax pros who’ve earned our seal of approval to handle your books, payroll and taxes. ·      🎯 Not sure what to do next in your business? Let’s figure it out together. Book a free 30-minute consult call with the EntreLeadership Team. ·      📞 Have a question for the show? Call 844-944-1070 or send us a message. ·      📚 Order Dave’s most recent EntreLeadership book, Build a Business You Love. ·      📧 Get EntreLeadership’s free weekly newsletter: expert advice and practical tips from the same playbook we used to build Ramsey Solutions into a $300 million company. ·      🌎 Attend our world-class leadership conference, EntreLeadership Summit. ·      📝 Stop guessing. Get a plan built for your business and someone who holds you to it. Find out which coaching option is right for you. ·      📈 Bad hires. Strategies that never get off the ground. 60-hour workweeks. Sleepless nights. EntreLeadership Master Series is where you trade all that for the exact systems our Executive Team used to scale to $300 million. Don’t wait until seats are sold out.   Connect With Our Sponsors: ·      Go to BELAY Solutions or text ENTRE to 55123 for their free resource. ·       See if Christian Healthcare Ministries Groups are the right fit for your organization. ·      Visit NetSuite today to learn more.   Listen to More From Ramsey Network: 🎙️ The Ramsey Show 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💰 George Kamel   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

I've talked to a lot of entrepreneurs who think they need an LLC right off the bat. But that's not always the case. I didn't create an LLC for our company until we were already doing over a million dollars a year. At best, when you're still getting your business off the ground, an LLC might be a waste of time and money. At worst, it's a distraction from something way more important. So today, Entree Leadership's head coach, John Falcons, is walking through what an LLC does and doesn't do when you might be ready for one and what you should really be focusing on instead.

Let's get to it. All right, let's level set right off the bat about what an LLC actually is. It's a limited liability company, which I admit is clear as mud. That doesn't mean anything to anybody. It basically says to the world, this business is a separate thing from me personally.

It's just a form of legal structure. And here's what that means for running a business. First, it creates a separation, a clean line between you and the business. And in a world where people will sue over the smallest thing, you want that line. So if you're running a backhoe on a job site, for example, and you, I don't know, smash somebody's Tesla, they can't come after you personally. They can only sue the business. Your personal bank accounts, your house, any assets you have, all that stuff is protected.

And that is a great thing. But hold on. We'll come back to that in a little bit. later. Second, an LLC makes operations cleaner. Everything you do runs through the LLC, your bank accounts, your contracts, any hiring you do, the ownership structure. Again, it's a great thing. You want these kind of things in your business, but that can make it seem like an LLC is more important than it actually is, especially if you're just starting out. So let's get into some of the myths people have around LLCs. Number one is, I need an LLC before I can start my business. No, you don't.

You know what you need? You need customers. I've coached so many people who get hung up on the LLC before they've even made their first dollar. You need to get out there and prove that someone will pay for what you sell. If you run a lawn care service, you need to get somebody to pay you to mow their If you do pressure washing, you need to find some houses that are green and need to be cleaned. If you're a photographer, you need to take some darn good pictures. But what about all the separate business from personal stuff? What you need to do is go down to the bank, open up a business account. This is called a DBA, a doing business as account, like John Falcons, doing business as

falkins roofing or Falcons in company or whatever. You don't even have to prove you already have customers. or revenue. In most states, forming a DBA is a matter of filing some paperwork, paying a fee, and providing basic information about your business. Then get some business insurance. It's not all that expensive, and some basic bookkeeping software like QuickBooks and run your business through that. Depending on what line of work you're in, that's generally enough to get started and it'll save you from wasting a few hundred bucks or more to file for an LLC. Not to mention the time you will have wasted.

because that's what's really happening. Filing the paperwork for an LLC feels like progress, like you're doing something important, but it's actually just busyness. It's not business. It's just procrastinating doing the real work you really need to be doing, getting customers, making sales, and doing jobs,

getting paid, and validating that the market really wants what you have to offer. You can always create an LLC later. Okay. Myth number two, an LLC protects me from everything. Yes, an LLC gives you some protection. We've already talked about that, but it's only one piece of protecting your business.

One, you also need to think about the ownership structure, the insurance, having safe business practices, an LLC solves none of that. And the bigger point here is, if you have an LLC, you actually have to operate like one. You can't just open the LLC and sign the paperwork and check that box and move on. You've got to start running everything through the LLC.

A contract is never signed in your name. It's always signed in the name of the LLC. An invoice is never in your name. It's always in the name of the LLC. You don't just purchase equipment or property in your name. It's always the name of the LLC. You have to be absolutely locked in about this. The minute you start mixing personal and business finances,

you are opening the door to getting screwed. If some Sue Happy Karen out there finds a place where this isn't airtight, they can come after you directly. And a court might agree with them. It's called piercing the corporate veil, which is a really cute way of saying you're about to get punched in the face. So no, an LLC doesn't give you blanket protection, and it can actually screw you up,

if you're not really, really diligent. But running a business isn't just about protecting yourself. It's also about taking care of the people that work for you. And the team is worth every dollar you invest in them. Behind payroll, healthcare is one of the biggest expenses a business has. That's why I wanna tell you about Christian Healthcare Ministries Groups Program. It's a faith-based alternative to traditional health insurance,

where members help pay. each other's medical bills. It's a great option, not only for individuals, but also for small businesses to take care of their people in a way that's effective and affordable. Whether you're a church, a nonprofit, a school, or a family business, many organizations report saving 30 to 50 percent compared to traditional health insurance. Of course, the goal isn't just cutting costs. It's being a wise steward of the resources you've been given. CHM has over 700 participating groups and they offer flexibility for companies of different sizes. So if you're responsible for your organization's health care benefits, contact CHM. One of their representatives

will walk you through your options and help determine whether the groups program is a good fit for your specific situation. So go to ch ministries.org slash entree or call 1-800 join CHM. And finally, I want to talk about myth number three. Having an LLC will make my business more successful. This is probably the biggest misconception I've heard over the years of coaching small business owners. Having those three letters doesn't make your business any more successful than having a gym membership makes you fit.

You might think you look impressive or legit or whatever. Your customers don't care. They care if you answer their phone calls. If you show up on time. if you do a really good job. Those are the things your customers care about. Great businesses are built by serving their customers really, really well.

Not by filing paperwork? Those are the big misconceptions about LLCs. But don't hear what I'm not saying. I'm not saying you never need an LLC. Up until now, I've been mostly talking about people who are early in their business journey. There are legitimate times and reasons to create an LLC, especially when you start to see some of these things happening.

You're making consistent revenue, not one-off gigs. You have regular, repeatable income. But the more money you make, the more risk you take on. Now you've got something to lose, and you want to make sure the risk stays in the business, not your personal accounts. The whole point of the LLC, protection. But you have to have something to protect.

Or maybe you're signing contracts with clients or vendors. Now you're getting other people involved and the more people, the hairier this thing called business gets. Every contract you sign is a promise. And I'll tell you, that bender who seems so nice at first suddenly won't be when they feel like that promise has been broken. And if your name is on the contract, guess who they're coming after?

Don't do that. This is where you've really got to have a wall between the personal and the business. So all contracts should be signed in the name of the LLC. Same thing if you're buying equipment or property. It has to be in the name of the business. That's a lot of risk to take on as an individual, especially when you start thinking about liability.

If you sign a contract in your name, why did you even start the LLC to begin with? So yes, get an LLC when you start buying large equipment or property, and most importantly, you can get an LLC after you've started to see success. If you're at that point, it's time to intentionally think about the legal structure of your business and a wise place to start. is sitting down with a good CPA or a business attorney to talk through your options. And if you need help finding the right tax person for that conversation,

we've got some folks that we trust. I'll put a link in the description for you to check out. Ultimately, here's what I want you to walk away with today. If you're spending more time researching LLCs than talking to customers, you're focused on the wrong thing. Start serving people. Start making sales. Build something worth protecting.

then put the right legal structure around it. That's the work, friends, so go get after it. Whether you end up with an LLC or not, don't lose sight of what really matters, taking care of your customers. If you do your work with integrity and with excellence, they will reward you with certificates of appreciation with president's faces on them.

If you enjoyed this episode, be sure to like, share, and subscribe for more real-world leadership content. I'm your host Dave Ramsey, and this is Entree Leadership. Thank you.