Everyone makes mistakes. It’s impossible to do things perfectly all the time, but the best you can do is learn from your mistakes and avoid making them again. We can remove the parts of our lives that are costing us money and prevent the chance that they cost us money in the future.
Our Financial Mistake
I created an LLC about 2 years ago, but did not receive notice that my LLC had been created until a few months after having submitted the paperwork. However, the LLC went into effect when California received my application, not when they processed it. I was unaware that I had to file a form despite having no income and not owing the state anything.
It was a simple oversight and a dumb mistake on my part, I should have done my own research and known about all the rules instead of simply assuming that no income and not owing any taxes meant I was absolved of any filing responsibility.
How Much It Cost Us
As a result, I found out 16 months later that since I did not file, I owed them $216 ($18 per month I was late for the first 12 months). I hate parking tickets, but even those are only $75 each. This one stings a lot, so I’m making sure it can’t happen again in the future.
How We’ll Avoid It In The Future
I did a few things once I found out about this. First, I re-read all the requirements for LLCs, which I already knew that I had completed for the past two years. I wanted to make sure I wasn’t missing anything.
The other thing I am doing is closing my LLC. Come 2014, I will be shutting down my LLC and running my business as a sole proprietorship. The benefits of having an LLC are outweighed.
What We Learned
I can’t say that an LLC is always a bad decision, but it was not worth it for me. Before taking on any business adventure, always be sure to fully investigate all the costs and go through the process on what you’ll need to do each filing period.
I certainly took the requirements too likely, but hopefully I’ve learned from my mistake and won’t repeat it ever again.