Day 5 Transcript
NOTE: Today’s transcript is followed by an AI prompt that can be used with your AI provider of choice. Just copy and paste it into ChatGPT or Perplexity and it will help you answer today’s questions for your specific side hustle… the way a human teaching assistant would help you in an Ivy League university. If you’re eager for more on today’s topic, I’ve included a Secret Dessert Course at the very end — a bonus section that isn’t directly covered in today’s video but has a lot of value practical, hands-on value. That dessert also comes with its own AI prompt.
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Part 1: Separate and Safeguard Your Hustle
There's this great Mike Tyson quote: "Everybody has a plan until they get punched in the mouth." Yesterday was the plan. Today is all about "the slip and roll", the "bob and weave"--- preparing for the punch.... the sweet, sweet anticipation of a mouth full of blood. Apparently, I'm a vampire.
Ok. Welcome to Day 5 of starting your side hustle! We’re taking 28 Days-- 28 small steps-- to build a business that’s meaningful, impactful, and profitable. Today’s focus is on legal setup in the U.S.—without breaking the bank. Lawyers are great, but they’re expensive, and for most side hustles, you don’t need them (in the flesh) to get started. The goal today is to help you understand the basics so you can protect yourself, operate legally, and avoid unnecessary dumpster fires down the line.
If Day 1 was about discovering your “why,” Day 2 about narrowing down your “what,” Day 3 about understanding the competition, and Day 4 about creating a business plan, Day 5 is about making sure your hustle has a solid legal foundation.
If you need a real-life example to take this part seriously, think about Sophia Amoruso, founder of Nasty Gal and author of GIRLBOSS.. She started by selling vintage clothes on eBay and grew her side hustle into a multimillion-dollar business. Early on, she didn’t pay much attention to legal details—until a trademark dispute forced her to change her business name and rebrand overnight. That scare taught her the value of getting the legal stuff right from day one. Sophia’s story is a reminder that a little paperwork now can save you a world of pain later, no matter how small your hustle starts.
A strong legal setup is like a prenup with your rich future self—because your current self might actually be their worst enemy. “Your future mama don't like current you and she likes everyone.”
Ok. Usually at this point in the video, we get a visit from Quizzy Nutkin– master assassin– and I list the two questions we’re going to answer today. Buuuut…
First- some basic folk wisdom for hustling. Don’t shit where you eat.
Seriously. What I mean is that your side-hustle should never be in the same domain as your day job company. If you’re in banking tech, stay the hell away from banking. This advice isn’t just about ethics—it’s about protecting yourself legally and professionally. Many companies have non-compete agreements or intellectual property clauses baked into employment contracts, which could land you in serious trouble if your hustle overlaps with their business interests.
Drawing clear boundaries between your hustle and your day job is a reasonable way to avoid legal gray areas and to protect your reputation.
This is where something called NAICS codes come into play—NAICS stands for the North American Industry Classification System– and it categorizes businesses by their economic activity using six-digit codes. If your side hustle falls under a different NAICS code than your employer’s primary business, it’s often legally distinct and may not violate non-compete agreements. For example, if your employer operates under NAICS code 522110 (Commercial Banking), starting a business classified under 541611 (Management Consulting Services) could protect you from legal disputes because they are in separate industries. Google and use the NAICS lookup tool to verify your hustle’s potential classification. It’ll let you sleep easier.
The other practice that’s a violent “no” – and I can’t believe I even have to say this out loud– never approach your company’s client or partners with your hustle. Ever. That’s a bold red line. Never cross it. Why? Because doing that doesn’t just burn bridges—it drops napalm on them. It’s an unspoken rule of professional conduct that targeting your employer's clients or partners is an act of betrayal, even if it isn’t explicitly prohibited in your contract. Beyond the ethical breach, it can damage your reputation– within your industry– making future opps harder than they need to be. Instead, focus on building a completely separate audience or customer base for your hustle—one that has no overlap with your employer's ecosystem.
Protect your network at your day-job as fiercely as you protect your hustle and your ideas—your reputation will always be one of your most valuable business assets.
If you’re still unsure how to differentiate your hustle from your day job, start by figuring out the industries or markets that are adjacent but unrelated to what you do at work. For example, if you’re in banking tech, consider exploring fintech for small businesses or personal finance tools for individuals— areas where there’s no direct conflict of interest but where you can still leverage all the skills that landed you your day job… and you can still leverage all the crap you’ve learned from your professional experience without stepping in a big pile of….
That’s how you hustle smarter.
Part 2: Choose Your Legal Structure
This is Day 5, Part 2. Ok… Back to the usual format.
Here are two questions we’re tackling today:
- What’s the best legal structure for your business—ie., a sole proprietorship, LLC, or corporation—and how does it align with your goals?
- What licenses, permits, or registrations will you need to operate legally in your industry and location?
Quizzy’s clearing plotting something today– rubbing his paws together all evil like.
Ok. Let’s start with the first one: What’s the best legal structure for your hustle?
You’ve got three main options here: sole proprietorship, LLC (Limited Liability Company), or corporation. Each one has pros and cons, so let me break it down for you in plain English.
- Sole Proprietorship: This is the simplest option. It’s just you running your business under your own name or a DBA (“Doing Business As”). It’s cheap and easy to set up—no separate tax filings—but here’s the catch: there’s no liability protection. If something goes wrong, like someone sues you or you rack up debt, your personal assets (house, car, savings) are at risk. This works fine for low-risk hustles like freelancing or consulting.
- LLC: This is the sweet spot for most side hustlers. It protects your personal assets from business liabilities while keeping taxes simple (your business income “passes through” to your personal tax return). It costs a bit more to set up—usually $100-$500 depending on your state—but it’s worth it if you’re offering products or services where liability could be an issue. Think of it as a safety net for moderate-risk hustles.
- Corporation: This is the big leagues. Corporations offer the strongest liability protection and are ideal if you’re planning to raise capital or scale into a large business. But they’re more complex to set up and maintain—you’ll need things like a board of directors and annual shareholder meetings—and C-Corps get hit with double taxation (profits are taxed at both the corporate level and personal level). Unless you’re aiming for massive growth or outside investors right away, this might be overkill.
You can do it all online here in the States. But whichever service you pick, I’ve found that for most side hustlers just starting out, an LLC is usually the best option—it protects you without overcomplicating things. But if you’re doing something super low-risk (like selling digital products), a sole proprietorship might be fine to start with.
The larger point: choosing the right structure for your hustle is about matching your ambition with the right level of protection—think about where you want your business to go.
Part 3: Secure Licenses, Permits, and Registrations
This is Day 5, Part 3. Now let’s move on to the much more exciting second question: What licenses, permits, or registrations will you need? (Zzzz) This part depends entirely on what kind of hustle you’re running and where you’re located. Let me give you some clues about how to figure it out:
1. Check Local Requirements
Most businesses need a basic operating license from their city or county government. If you’re working from home (like many side hustlers), check if you need a home occupation permit.
2. Industry-Specific Licenses
Certain industries have extra hoops to jump through. For example:
- Food businesses need health permits.
- Personal services like hairdressing require state cosmetology licenses.
- Trades like plumbing or electrical work require contractor licenses.
Just…. do some Googling or check with your local Small Business Administration (SBA) office to see what applies to your hustle.
3. Federal Licenses
If your hustle involves regulated activities like selling alcohol, firearms, or operating in transportation/broadcasting, check federal agency requirements.
4. Register Your Business Name
If you’re not using your legal name as your business name (e.g., “Jane Smith Consulting”), file a DBA (“Doing Business As”) with your state or county.
5. Get an EIN (Employer Identification Number)
An EIN is like a Social Security number for your business—it’s free from the IRS website and takes less than 15 minutes to apply for one online. You’ll need this if you plan to hire employees or open a separate business bank account… which by the way… is a good idea: a separate business bank account. That’s also tomorrow’s topic.
Taking care of the basics today (and tomorrow) frees you up to focus– superskill number 1– to focus on growth next week and beyond.
Ok. Take a moment and try to answer the Day 5 questions for your hustle without AI and before you listen to the next section-- the 28-Day Ivy League MBA. I personally think it's useful to try to answer questions without AI first, but if you'd rather do that: The AI teaching assistant prompt will drop with today's case study... in a couple of hours. If you don't know what I'm talking about, check out Lunch Break Millionaire Day Zero... or go over to superserious.com where I’m posting daily transcripts. The AI prompts are there too. That's it. Hustle smarter.
Part 4: 💼 Manage Risk with a Matrix: Today's Ivy League MBA Skill
Day 5, Part 4 of Lunch Break Millionaire– where we turn whatever you're eating for lunch into an Ivy League MBA degree. It’s Leftover Friday! Today’s lunch: day-old comfort food Jollof rice- West Africa's answer to biryani. And that’s perfect because today’s MBA lesson is about comfort– not the food kind– but the kind that lets you sleep in peace. Let’s learn how to manage risk the MBA way: with a matrix.
Alright, as my kids would say, let me cook: Every hustle comes with risk. No cap yo. They don’t say Yo. I do. Every hustle comes with risk. Doesn’t matter if you’re selling t-shirts or building the next AI unicorn—something can always go sideways. Most people ignore this part because it feels like worrying for the sake of worrying, but that’s not what we’re doing here. We’re talking about seeing around corners. We’re talking about spotting the potholes before you blow out your tire. That’s how the Risk Management Matrix is used.
Basically, this tool helps you map out what could go wrong, how likely it is, and how much damage it could do. You’re not listing random fears—you’re putting them in a grid so you can see what’s actually worth worrying about and what’s just background noise.
It’s four boxes: on one side, you’ve got “likelihood” or probability—how likely is this bad thing to happen? On the other, you’ve got “impact”—if it does happen, how bad is it? High likelihood, high impact? That’s your top priority. Low likelihood, low impact? Forget about it for now.
Let’s bring this down to earth. Say your hustle is a new app for creators like mine is. What could go wrong? Maybe someone hacks your user data. Maybe Apple changes its App Store rules and boots you. Maybe your payment processor freezes your funds. Maybe you get sued over a copyright issue. Instead of letting all those worries swirl around in your head, you write them down, one by one. Then you ask: how likely is this to happen? And if it does, how much does it hurt? Stuff that’s both likely and painful goes in the “deal with this now” box. Stuff that’s unlikely and not a big deal? Push it to the side.
Here’s how this connects to today’s questions. When you’re thinking about legal setup, you’re already managing risk—picking the right business structure, keeping your hustle separate from your day job, making sure you’re not stepping on your employer’s toes. The Risk Management Matrix just makes it visual. It forces you to see where you’re exposed and where you’re already covered. If you’re worried about getting sued, maybe it’s time to look at business insurance. If you’re worried about losing access to your main supplier, maybe you need a backup plan. If you’re worried about burning out, maybe you need to build in some delegation or automate a few things.
Take a sec and sketch out your own risk matrix. Draw two axes: one for likelihood, one for impact. Start dropping in every risk you can think of, from “my website goes down” to “my co-founder ghosts me” to “the IRS comes knocking.” Be honest. Don’t sugarcoat it. Once you’ve got your risks mapped, look for the ones sitting in the danger zone—high likelihood, high impact. That’s where you put your energy first. Figure out how to prevent them, or at least soften the blow if they happen.
Keep telling yourself, you’re not doing this to scare yourself out of hustling. You’re doing this so you can hustle with your eyes open. The people who last in business aren’t the ones who never take risks—they’re the ones who see the risk coming and have a plan. You don’t need to be paranoid, just prepared.
That’s how you hustle smarter.
Part 5: Learn From My Legal Setup: The 28-Day Case Study
This is Day 5, Part 5 of Lunch Break Millionaire. This is the segment where we #BuildinPublic– where I answer the daily questions from parts 1, 2 and 3– using the MBA skills we just learned in part 4– and showing my work here in part 5– sharing how I’m building my hustle from scratch-no filters, just the real journey. You don't need to actually like or subscribe. I'm not doing this for the clicks. But if you’re leveling up from other creators you follow or know, introduce us. I want to learn from them and help them level up, too. We all deserve better than just making rich people richer.
Ok Let me walk you through how I answered today’s questions for my own hustle:
For my legal structure: I went with an LLC because my hustle involves software development for creators—there’s potential liability if something goes wrong with data security or functionality. The LLC gives me peace of mind knowing my personal assets are protected. I used the NJ state government’s online service– called the NJ Department of the Treasury–
Division of Revenue and Enterprise Services. Rolls right off the tongue.
For licenses and registrations:
- I applied for an EIN—it was quick and painless on the IRS website… although the IRS does something weird with what should be 24/7 online experience: they only offer it Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard time.
- Since I’m working remotely from home in New Jersey, I checked local zoning laws and applied for a home occupation permit (easy process).
- My software might involve intellectual property concerns down the line, so I’m exploring trademarks for my brand name as well. And I’ve talked to a patent lawyer– an old friend of mine– but he just laughs in my face because everything I do, I go open source.
The way I think about it– and I suggest you do the same: every step I take– every step YOU take– to legitimize the hustle now is an investment in confidence, credibility, character. And every other c word– competence, consistency, commitment…. Well, maybe not EVERY other c word– especially if you’re British… but you get the point.
Taking care of the basics isn’t glamorous, but it’s an act of respect for your own dreams. It's the most boring version of dancing when no one else is watching.
Today’s key takeaways? Setting up legally doesn’t have to be expensive or overwhelming. It’s not even that time consuming once you’ve done some research– which is also not that time consuming. There’s no reason to avoid it. And I’ll close this segment with a gentle folksy reminder: don’t shit where you eat.
Prompt #1 - Separate and Safeguard Your Hustle
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Prompt #1 - Separate and Safeguard Your Hustle ○
Today you’ll make sure your side hustle is built on a solid legal foundation-protecting your personal assets, keeping your business compliant, and avoiding rookie mistakes that can cost you down the line. You’ll be coached by Ivy League faculty whose research is foundational in entrepreneurial law and risk management:
- **Professor Guhan Subramanian, Harvard Law School & Harvard Business School:** Authority on business law, contracts, and legal structure selection.
- **Professor John C. Coffee Jr., Columbia Law School:** Expert in corporate formation, compliance, and regulatory risk.
- **Professor Amy D. Sepinwall, Wharton School, University of Pennsylvania:** Specialist in business ethics and legal best practices for founders.
**What Today’s Coaching Will Help You With:**
You’ll choose the right legal structure for your business, learn how to keep your hustle legally distinct from your day job, and identify the licenses, permits, and registrations you’ll need to operate safely and confidently.
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### Step 1: Reflection Questions
Please answer these questions in a few sentences each:
1. **What’s the best legal structure for your business-sole proprietorship, LLC, or corporation-and how does it align with your goals?**
- Consider your risk tolerance, growth ambitions, and whether you need liability protection.
2. **What licenses, permits, or registrations will you need to operate legally in your industry and location?**
- Think about local, state, and federal requirements, as well as whether you’ll need a DBA (Doing Business As) or EIN (Employer Identification Number).
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### Step 2: MBA Skill – Risk Management Matrix
Today’s MBA lesson is the Risk Management Matrix-a tool to help you spot and mitigate the biggest legal risks before they become problems. For each risk you identify (e.g., personal liability, non-compete with your employer, missing permits), note:
- **Likelihood:** How likely is this risk to happen?
- **Impact:** How bad would it be if it did?
- **Mitigation:** What’s one step you can take to reduce or eliminate this risk?
Use this matrix to prioritize which legal steps you need to take first-so you protect what matters most.
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### Step 3: Coaching & Real-World Example
After you reply, I will use the writings of Professors Subramanian, Coffee, and Sepinwall to:
- Help you clarify which legal structure best fits your business and personal goals.
- Guide you in identifying and applying for the right licenses, permits, and registrations.
- Walk you through common pitfalls (like mixing personal and business finances, or violating non-compete clauses) and how to avoid them.
- Share a real-world story of a founder who saved their business by getting the legal basics right from day one.
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**How to use this prompt:**
- Respond with your answers to the reflection questions and your draft risk management matrix.
- Your Ivy League coaching panel will help you refine your legal setup, flag any blind spots, and suggest next steps.
- Remember: A little paperwork now can save you a world of pain later. The goal is protection, not perfection.
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Ready? Share your answers and risk matrix below. Let’s hustle smarter, one lunch break at a time!
Secret Dessert Course
Setting up your own LLC might sound intimidating, but the AI prompt below can help you with a walkthrough. It’ll show you how to do it step by step for your state (in the US). If you don’t live in the US, just replace all the references to the US in the prompt with your country.
No need to pay hefty lawyer fees or get lost in legal jargon. Step-by-step baby! The entire process in plain English, from picking a unique name to filing your articles of organization online.
AI can help you learn exactly what paperwork you need and how to avoid common mistakes. Just copy and paste this prompt into your favorite AI assistant to enjoy Day 5’s dessert course.
Prompt #2 - Complete Your Plan-to-Action Checklist
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Prompt #2 - Complete Your Plan-to-Action Checklist ○
Today’s focus: forming your own LLC (Limited Liability Company) in the U.S.-step by step, online, and with state-specific tips. This interactive guide is designed to help you protect your hustle, keep your personal assets safe, and avoid rookie mistakes. You’ll be coached by Ivy League legal experts in entrepreneurship:
- **Professor Guhan Subramanian, Harvard Law School & Harvard Business School:** Authority on business law and legal structure selection.
- **Professor John C. Coffee Jr., Columbia Law School:** Expert in corporate formation, compliance, and risk management.
- **Professor Amy D. Sepinwall, Wharton School, University of Pennsylvania:** Specialist in business ethics and legal best practices for founders.
**What Today’s Coaching Will Help You With:**
You’ll get a concise, interactive checklist for forming your LLC online, with relevant links, state-specific tips, and common pitfalls to avoid-so you can get it right the first time.
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### Step 1: Tell Us Where You’re Forming Your LLC
Please answer:
1. What U.S. state will your LLC be registered in?
2. What will your LLC’s name be?
3. Will you be the only owner (single-member) or have partners (multi-member)?
4. (Optional) What type of business will your LLC operate (industry, product/service)?
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### Step 2: DIY LLC Formation Walkthrough
After you reply, I will use the writings of your Ivy League coaching panel to:
- Provide a step-by-step, state-specific checklist for forming your LLC online (with official links to your Secretary of State or equivalent).
- Highlight state-specific fees, annual requirements, and timelines.
- Offer guidance on choosing a registered agent, drafting an operating agreement, and obtaining an EIN (Employer Identification Number) from the IRS.
- Flag common pitfalls (like missing publication requirements, mixing personal and business finances, or forgetting annual reports).
- Suggest additional legal resources if your business is in a regulated field.
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**How to use this prompt:**
- Respond with your state, LLC name, and owner info above.
- Your coaching panel will return a checklist with links and tips tailored to your state and business.
- You’ll leave with a clear, actionable roadmap for forming your LLC-no legalese, no confusion.