Yes, you can potentially get fired for starting an LLC if it violates your employment agreement, creates a conflict of interest, or interferes with your job duties.
Many employees form LLCs to earn extra income, test a business idea, or eventually transition into full-time entrepreneurship. In most cases, having an LLC on the side isn’t a problem-but there are important legal and professional boundaries to respect. If you cross certain lines, your job could be at risk.
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1. At-Will Employment and Your Rights
In the U.S., most employment is “at-will,” which means an employer can terminate you at any time for almost any reason-except for protected classes such as race, gender, or religion. That includes being let go for starting a business if your employer believes it impacts your work or loyalty to the company.
This means your job isn’t automatically protected just because your side business is legal. You need to ensure your LLC doesn’t interfere with your obligations as an employee.
2. Check Your Employment Agreement
Your employment contract or company handbook likely includes specific policies about outside work. The most relevant clauses to review are:
- Moonlighting policy: May prohibit or require approval for side businesses or freelance work.
- Non-compete clause: May restrict you from operating in the same industry or serving similar customers.
- Conflict of interest policy: Prohibits actions that compete with or harm your employer’s interests.
If your LLC violates any of these clauses, your employer may have grounds to terminate your employment.
3. When Your LLC Could Get You Fired
Your employer may take disciplinary action if:
- Your LLC directly competes with your employer
- You use company time, equipment, or resources to run your business
- You fail to disclose your LLC when required by policy
- Your side business interferes with your job performance
Even if your intentions are good, employers may view such situations as breaches of trust or violations of your contract.
4. When Your LLC Is Unlikely to Be a Problem
If your LLC operates in a completely unrelated field and doesn’t affect your job duties, it’s unlikely to cause problems. For example, if you work as a project manager and run a side photography business, your employer probably won’t mind-as long as you keep the two separate and your performance doesn’t suffer.
Many professionals maintain side LLCs without issue, especially when:
- They work on the business only during personal time
- They avoid using company resources
- They maintain full transparency if required by contract
5. How to Avoid Getting Fired Over Your LLC
To protect your job while running an LLC on the side:
- Review your employment contract carefully
- Avoid any competitive or overlapping services
- Work on your business only during evenings, weekends, or PTO
- Use separate devices, accounts, and software
- Be honest with your employer if disclosure is required
It’s better to have a transparent conversation than risk being seen as secretive or disloyal. A brief meeting with HR or your supervisor can clarify expectations and show that you respect company policies.
6. Know When It’s Time to Transition
If your LLC begins to demand more time or create friction with your job, it may be time to start planning your exit. Trying to juggle both indefinitely can lead to burnout or employer concerns.
Build up your business, create a financial cushion, and make a strategic plan to leave your job when the time is right. Leaving on good terms is always better than being let go under a cloud of conflict.
You absolutely can start an LLC while still employed-but you must do it carefully. Review your employment agreement, avoid conflicts of interest, and respect your employer’s time and resources. Most importantly, don’t assume that what you do outside of work is entirely private. If your business activity interferes with your job or violates company policy, you could be putting your employment at risk.
Handled wisely, your LLC can grow into a successful business while your job provides income and stability. Just make sure you’re not jeopardizing one to build the other.
