You’ve got a product idea, a campaign on Kickstarter or Indiegogo, and an audience that’s ready to back it. There’s just one issue: You haven’t earned a single dollar in revenue yet. So, you’re wondering—should I form an LLC now, or wait until the money starts flowing?
The answer depends on your goals, your risk tolerance, and how far along your project is. But here’s the simple truth: Yes, you can—and often should—form an LLC for your crowdfunded startup even before revenue arrives. It’s not about how much you’re making—it’s about how you’re building.
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Why Form an LLC Before You Have Revenue?
There are real advantages to setting up your business structure early, especially for crowdfunded startups:
1. Accepting and Managing Funds Legally
Once your crowdfunding campaign goes live, you’ll need a business bank account to accept payments. Most platforms like Kickstarter or Indiegogo recommend (or require) business banking for campaign disbursements. An LLC allows you to:
- Open a business bank account under your brand name
- Accept and track funds separately from personal finances
- File business taxes correctly and transparently
This is especially important for campaign accountability—keeping backer money isolated for production, shipping, and fulfillment.
2. Limiting Personal Liability
Say your campaign takes off—and then hits production delays, shipping issues, or refund demands. If you’ve made promises to backers, they could pursue legal action if they believe the funds were misused. An LLC helps shield your personal assets from business-related claims, as long as you maintain financial separation and good business practices.
3. Signing Vendor and Fulfillment Agreements
Even if you’re pre-revenue, you might be:
- Negotiating with manufacturers
- Setting up software subscriptions or licenses
- Hiring freelancers for design, marketing, or web development
These contracts are easier—and safer—to manage under an LLC. You don’t want your personal name on legal documents tied to long-term obligations.
4. Building a Brand from Day One
Most successful crowdfunded startups evolve into long-term businesses. Why wait until you’re overwhelmed with orders or requests to get your structure in place? With an LLC, your business is official before launch—instilling trust and showing investors, collaborators, and early customers that you’re serious.
Can You Form an LLC Without Making Money?
Yes, absolutely. There’s no requirement to be profitable—or even operational—to form an LLC. In fact, many entrepreneurs do it before their product is finalized or their campaign goes live. This allows them to:
- Reserve a business name and domain
- Apply for an EIN (Employer Identification Number) for banking and tax purposes
- Register for local licenses or permits
- Build business credit or apply for funding
Your LLC can remain inactive or file zero revenue taxes until you’re generating income—but having the entity in place streamlines every other part of your launch.
How to Form an LLC for a Crowdfunded Project
- Choose a business name – Ideally, this should align with your campaign or product brand.
- Check availability through your Secretary of State and domain registrar.
- File Articles of Organization with your state. Most states charge $50–$300 to register.
- Get an EIN from the IRS – You’ll need this to open a business bank account and report taxes.
- Open a business checking account – This is essential for managing campaign funds transparently.
- Create an Operating Agreement – Especially if you have co-founders or future equity splits to define.
Real-World Startup Examples
Shannon – Board Game Creator
Shannon ran a successful Kickstarter for a party card game. Before the campaign launched, she formed an LLC to manage funds, sign a fulfillment contract, and issue payments to her freelance illustrator. She was able to provide backers with updates and receipts under “Lighthouse Games LLC,” adding credibility to the whole process.
Andre – Eco-Friendly Product Startup
Andre developed a reusable household item and ran a pre-order campaign on Indiegogo. Even though he hadn’t made a sale yet, he formed an LLC early so he could sign with a manufacturer and apply for a business PayPal account to manage vendor payments and shipping costs.
Emily – Apparel Launch on Kickstarter
Emily launched a crowdfunded sustainable fashion line. She formed an LLC before collecting her first dollar so she could apply for a resale certificate, work with a print-on-demand company, and build a Shopify store using her brand name under legal protection.
Should You Wait Until After the Campaign Succeeds?
It’s tempting to delay forming an LLC until you’ve “proven” the idea. But waiting can create issues:
- Campaign funds may be deposited into personal accounts, blurring financial lines
- You might sign contracts or hire freelancers without legal protection
- Delays in forming the LLC after launch can cause tax confusion or brand registration conflicts
In short, it’s better to form early and stay ready than scramble to form a business after the money arrives.
Tax Considerations for Pre-Revenue LLCs
Even if your LLC earns no income during its first year, you’ll still need to file a tax return. For a single-member LLC, this means a Schedule C attached to your personal return (even with $0 income). You can also:
- Deduct early business expenses, such as web hosting or design services
- Carry forward startup costs to future years
- Claim losses (if any) to offset future income
A tax professional can help you stay compliant and take advantage of any legitimate startup deductions.
Build It Like It’s Real—Because It Is
A crowdfunded business may start with passion and promises—but it’s still a business. Forming an LLC early helps you manage funds transparently, contract responsibly, and build a brand that investors, partners, and customers trust.
You don’t need a revenue stream to run things professionally. You just need the foresight to structure your project like it’s going somewhere—because if your campaign hits, it absolutely will.
