No, you are not legally required to tell your employer that you started an LLC-unless your employment agreement or company policy specifically requires disclosure of outside business activity.
Many people launch side businesses while keeping their full-time jobs. Whether you’re freelancing, selling products online, or building a service business, forming an LLC is a smart step toward protecting yourself legally. But once that LLC is created, a common concern arises: “Do I have to tell my boss?” The answer depends on your employment contract, company policies, and whether your new business could create a conflict of interest.
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Review Your Employment Agreement
If you signed an employment contract when you joined your current company, read it carefully before launching or operating an LLC. Look for clauses related to:
- Moonlighting or outside business activity: Some companies prohibit employees from working a second job or running a business unless they disclose it and get written permission.
- Non-compete clauses: These may restrict you from launching a business in the same industry, especially if you’re targeting similar customers.
- Confidentiality and intellectual property: Your employer may claim ownership of anything you create that relates to their business-even if it’s done on your own time.
Violating these terms could lead to disciplinary action, termination, or even legal action in extreme cases. If you’re unsure, speak with an employment attorney who can help you interpret your contract and assess your risk.
What If I Didn’t Sign a Contract?
If you didn’t sign a formal employment agreement, you’re not automatically off the hook. Many companies still have policies in their employee handbooks that govern outside work or side businesses. These policies may be broad and include rules about:
- Disclosing outside income sources
- Not using company resources for personal gain
- Maintaining productivity and avoiding distractions
If your employer has these rules, violating them could hurt your job security-even if you never signed a contract.
Are You Creating a Conflict of Interest?
Even if your company has no policy requiring disclosure, you should think carefully about whether your new LLC poses a conflict of interest. This can happen if:
- Your business offers similar services or products as your employer
- You’re targeting the same customers or vendors
- You’re using insights or contacts gained through your job to benefit your own company
Even the appearance of a conflict can damage trust. If your side business could in any way compete with your employer, it’s wise to disclose your plans and seek guidance or written permission.
Can My Employer Fire Me for Starting a Business?
In most states, employment is “at-will,” which means your employer can terminate you for any reason that isn’t illegal. That includes starting a side business-even if it’s not in direct competition. If your employer believes your business is interfering with your performance, creating a conflict, or violating policy, they may choose to end your employment.
This doesn’t mean you need to give up your entrepreneurial goals. It just means you should approach them strategically-especially if you rely on your job for income or benefits.
Tips to Stay Safe and Professional
If you decide not to tell your employer, make sure you still follow best practices to avoid problems:
- Never work on your LLC during company hours
- Don’t use company devices, software, or email for your business
- Avoid discussing your business with coworkers at work
- Keep all LLC records, accounts, and files separate
These boundaries help ensure your business remains a separate entity and that you’re not giving your employer any reason to claim you misused your position or resources.
What If My Business Becomes Successful?
If your side LLC starts generating meaningful income, you may want to transition to running it full time. This is a good problem to have, but it’s also the right time to notify your employer-either to resign professionally or, in some cases, to seek a more flexible arrangement while you transition out.
Leaving your job on good terms is always the better path. It preserves your reputation and may even lead to referrals or collaboration down the road.
You don’t have to tell your employer that you started an LLC unless your contract or company policy requires it-but that doesn’t mean you should ignore potential conflicts or risks. Review your agreements, keep your business activities completely separate, and avoid anything that could be seen as competing with your employer. With smart boundaries and good planning, you can grow your business without jeopardizing your current job.
