TikTok Told Me To Create an LLC.
TikTok is one of the newest social media platforms that offers its users fast-paced content all at a swipe of the finger. Like every social media platform, it comes with new influencers that offer their advice, tips and overall knowledge. However, once that knowledge becomes published, it’s forever in circulation for millions of viewers to take in daily. Users should be weary of any financial advice online, but when it comes to social media, take extra precautions.
Generally speaking, it’s probably best to not make financial decisions based on a app. Trends come and go, but LLCs can have a lasting impact on your business and financials. The most commonly preferred reason for starting an LLC generally has to do with protecting the owner’s assets. This means if there are any legal consequences or action against the LLC, the owner’s personal assets will be protected where no liquidation can occur. LLCs designate the business as a separate legal entity, which essentially separates the owner(s) from the business financially. However, for new business owners it’s important to understand that an LLC costs more to start and maintain than a sole proprietorship. Depending on your state, the initial cost to form an LLC can be around $500. It typically doesn’t stop there. Ongoing fees like franchise tax fees and even annual report fees can be charged throughout the lifespan of your LLC. For example, in the state of California the annual minimum franchise tax fee is $800 per year and it must be paid within three months of forming the LLC.
But why is TikTok not the best place to receive financial advice?
TikTok is a great place to engage with new content, trends and interests. However, it’s probably not the best place to receive financial advice. Being emerged in the payments industry we consistently see financials from “influencers” who make a lot of claims in regards to their ability to help new businesses. It’s a trend in itself, especially during COVID and the rise of platforms like TikTok, for new coaches to offer advice in return for followers. Many influencers give their viewers guidance on how easy it is to make money and what they should consider doing for their business to strike it rich. The downside is that most of these coaches themselves don’t have a strong financial history to back the free advice they give. As financial advisors within the payments industry, this is a problem we see consistently rising. New coaches/influencers create a community of followers that move forward with all advice given, when the coach is in no place to offer such advice.
Is there a way to tell if financial advice on TikTok is legitimate or not?
Unfortunately, there is no real way to determine if financial advice on TikTok is legitimate or not. The best you can do is see what the influencer has to offer outside of TikTok. The reality is that real financial advisors who venture to TikTok are using the platform to support their already established business. If you look at the influencer’s bio on their TikTok page, they should generally have other methods of contacting them listed such as: a website, email, telephone number, etc. If you look at the influencer’s bio and it’s just a random collection of emojis - it’s best to not take their advice too seriously. However, if they have a website linked where you can learn more about their knowledge from other sources or preferably reviews, then you can make the best informed decision for your business!
It’s always best to talk to a financial advisor that has a strong background in the finance/banking industry. Not only because the advice they may give will be what’s best in the long-run, but they can also assist you further with completing each action. It always helps to have another set of eyes on any financial decisions for your business. These decisions are what will ultimately protect you and your business. Don’t take your advice from TikTok, unless this influencer has a long history of offering beneficial advice, backed by satisfied customers.
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