You should tell your employer about your LLC if your employment agreement requires disclosure, your business overlaps with your job duties, or if your side business could be perceived as a conflict of interest.
Many professionals start LLCs while still working a traditional job. Whether you’re freelancing, launching an e-commerce store, or building an agency on the side, forming an LLC offers legal and financial benefits. But a common question arises: should you tell your boss? The answer depends on your employment terms, the nature of your business, and how transparent you want to be.
Contents
1. Review Your Employment Agreement
Before deciding whether to notify your employer, review your employment contract or employee handbook. Look for clauses such as:
- Moonlighting policies – These may restrict outside employment or require you to seek written approval for side businesses.
- Conflict of interest clauses – These prohibit you from engaging in activities that compete with or conflict with your employer’s business.
- Non-compete agreements – These may bar you from working in the same industry, especially if you’re planning to serve similar clients.
If your LLC falls into any of these categories, failure to disclose it could violate your contract and risk disciplinary action-or even termination.
2. When You Should Definitely Tell Your Employer
You should absolutely inform your employer if:
- Your LLC operates in the same industry or targets similar clients
- You’re using skills, contacts, or knowledge gained from your current job to build the business
- Your employment agreement includes a disclosure or approval requirement
Transparency in these cases protects you from future legal disputes or accusations of disloyalty. It also allows you to clarify boundaries and ensure your business activities are separate from your job responsibilities.
When Disclosure May Not Be Necessary
In many situations, you can run an LLC without telling your employer-especially if:
- Your business is in a completely unrelated industry
- You work on it exclusively during your personal time
- Your employment contract doesn’t include any restrictions or disclosure clauses
For example, if you work as an accountant and your LLC is a wedding photography business, there’s likely no conflict of interest. In such cases, disclosure is optional unless your company has a blanket moonlighting policy.
3. Risks of Not Telling Your Employer
Even if your LLC doesn’t conflict with your job, failing to disclose it-when required-can have consequences. If your employer discovers it later, they may view your silence as a breach of trust or a contract violation.
Potential risks include:
- Job loss or disciplinary action
- Legal action if your LLC is seen as competing with your employer
- Strained workplace relationships or damaged reputation
Weigh these risks carefully before choosing not to disclose.
4. How to Tell Your Employer Professionally
If you decide to disclose your LLC, be proactive and professional. Here’s how:
- Request a private meeting, preferably with your manager or HR
- Explain that you’ve formed an LLC for personal business unrelated to your job
- Emphasize that it won’t interfere with your work hours, performance, or responsibilities
- Offer to sign a written statement acknowledging boundaries
Being upfront and clear shows integrity and can help build trust, even if your employer has concerns.
5. Maintain Clear Separation Between Job and LLC
Regardless of whether you tell your employer, you should always maintain a strict boundary between your job and your LLC:
- Never use company equipment, time, or resources for your business
- Use a separate email address, phone number, and website
- Avoid client overlap or any appearance of competition
This not only protects you legally-it also makes your business look more professional.
In many cases, you’re not legally required to tell your employer about your LLC-but it depends on your contract and your business’s relationship to your job. When in doubt, transparency is often the safest path. By reviewing your employment agreement, avoiding conflicts of interest, and separating your work from your business, you can grow your LLC without putting your job at risk.
