You’re waiting for entity approval.
But you want to start. You have momentum. You don’t want to waste time. But you’re worried about legal risks.
You can do a lot before approval.
Many activities are safe. They don’t create legal problems. They move your business forward. They build momentum.
This guide shows you what’s safe.
Legal activities. Safe activities. Risky activities. What to avoid. What to do now.
Read this. Start safely. Build momentum.
Key Takeaways
- You can safely conduct market research, develop your product or service, build your brand, and create business plans before entity approval
- You can start building your website, social media presence, and marketing materials without legal risk—just don't make sales or enter contracts
- You can network, attend events, gather customer feedback, and validate your business idea before forming your entity
- Avoid making sales, entering contracts, hiring employees, or opening business bank accounts before entity approval
- Use the waiting period productively—build your foundation so you can launch immediately after approval
Table of Contents
Why Start Early
Starting early builds momentum.
What happens if you wait:
- Lost time and momentum
- Delayed launch
- Missed opportunities
- Wasted waiting period
What happens if you start safely:
- Built foundation
- Ready to launch immediately
- Momentum maintained
- Competitive advantage
The solution: Start safe activities now. Build your foundation. Launch faster after approval.
Safe Activities
These activities are safe before entity approval:
Market Research
What you can do:
- Research your target market
- Analyze competitors
- Study industry trends
- Identify customer needs
- Validate your business idea
Why it’s safe:
- No legal commitments
- No financial transactions
- Pure information gathering
- No entity required
Pro tip: Use this time to deeply understand your market. This research will inform your business strategy and marketing.
Product or Service Development
What you can do:
- Develop your product or service
- Create prototypes
- Test functionality
- Refine your offering
- Build your core product
Why it’s safe:
- Development work is safe
- No sales or contracts involved
- Personal project until entity exists
- Can transfer to entity later
Pro tip: Build your product now. You can assign intellectual property to your entity once it’s formed.
Branding and Marketing Materials
What you can do:
- Design your logo
- Create your brand identity
- Build your website
- Develop marketing materials
- Set up social media accounts
Why it’s safe:
- Creative work is safe
- No sales or contracts
- Can be transferred to entity
- Builds your foundation
Pro tip: Build your brand now. You can transfer branding assets to your entity once it’s formed.
Business Planning
What you can do:
- Write your business plan
- Develop your strategy
- Plan your operations
- Create financial projections
- Design your processes
Why it’s safe:
- Planning is safe
- No legal commitments
- No financial transactions
- Pure preparation work
Pro tip: Use this time to create a comprehensive business plan. This will guide your operations once the entity is formed.
Legal Activities
These activities are legal but require caution:
Networking and Relationship Building
What you can do:
- Attend networking events
- Build relationships
- Meet potential customers
- Connect with partners
- Gather referrals
Why it’s legal:
- Relationship building is safe
- No contracts or commitments
- Information gathering
- Can lead to future business
Caution: Don’t make commitments or enter agreements. Keep it to relationship building.
Pro tip: Build your network now. These relationships will be valuable once your entity is formed.
Customer Feedback and Validation
What you can do:
- Talk to potential customers
- Gather feedback
- Validate your idea
- Test your concept
- Refine based on feedback
Why it’s legal:
- Feedback gathering is safe
- No sales or contracts
- Information collection
- Helps refine your offering
Caution: Don’t make promises or commitments. Keep it to feedback and validation.
Pro tip: Validate your idea now. Customer feedback will help you refine your product before launch.
Intellectual Property Protection
What you can do:
- File for trademarks (as individual)
- File for patents (as individual)
- Protect your IP
- Secure your brand
- Document your creations
Why it’s legal:
- IP protection is safe
- Can be assigned to entity later
- Protects your assets
- Establishes ownership
Caution: You’ll need to assign IP to your entity once it’s formed. Consult with an attorney for proper transfer.
Pro tip: Protect your intellectual property now. You can assign it to your entity once it’s formed.
Risky Activities
These activities should wait until entity approval:
Making Sales
Why it’s risky:
- Creates tax obligations
- May require business registration
- Personal liability exposure
- Complicates entity formation
What to do instead:
- Wait until entity is approved
- Or operate as sole proprietorship temporarily (with risks)
- Get proper business registration first
Pro tip: Don’t make sales before entity approval. Wait until your entity is formed to protect yourself.
Entering Contracts
Why it’s risky:
- Personal liability exposure
- Contracts may not transfer to entity
- Legal complications
- May require entity to exist
What to do instead:
- Wait until entity is approved
- Or use “to be formed” language (consult attorney)
- Get proper legal structure first
Pro tip: Avoid contracts before entity approval. If you must, consult with an attorney about proper structure.
Hiring Employees
Why it’s risky:
- Requires EIN and tax setup
- Employment law compliance
- Personal liability exposure
- Complex legal requirements
What to do instead:
- Wait until entity is approved
- Get EIN first
- Set up proper employment structure
- Consult with employment attorney
Pro tip: Don’t hire employees before entity approval. Wait until you have proper structure and EIN.
Opening Business Bank Accounts
Why it’s risky:
- Requires EIN
- May require entity documents
- Personal account issues
- Banking complications
What to do instead:
- Wait until entity is approved
- Get EIN first
- Have entity documents ready
- Open account in entity name
Pro tip: Don’t open business bank accounts before entity approval. You’ll need your EIN and entity documents. See our EIN guide for getting your EIN quickly.
Pre-Formation Checklist
Use this checklist to stay productive:
Week 1-2: Foundation Building
- Complete market research
- Validate business idea with potential customers
- Develop initial product or service prototype
- Create business plan
- Design brand identity and logo
Week 3-4: Asset Development
- Build website (without sales functionality)
- Set up social media accounts
- Create marketing materials
- Develop content strategy
- File for trademark protection (if needed)
Week 5-6: Relationship Building
- Attend networking events
- Build customer relationships
- Connect with potential partners
- Gather referrals and testimonials
- Refine product based on feedback
Pro tip: Use this checklist to stay productive during the waiting period. Build your foundation so you can launch immediately after approval.
What to Avoid
Avoid these activities before entity approval:
Financial Transactions
What to avoid:
- Making sales
- Accepting payments
- Processing transactions
- Opening business accounts
- Financial commitments
Why:
- Creates tax obligations
- Personal liability exposure
- Complicates entity formation
- Legal complications
Legal Commitments
What to avoid:
- Signing contracts
- Making commitments
- Entering agreements
- Legal obligations
- Binding promises
Why:
- Personal liability exposure
- Contracts may not transfer
- Legal complications
- May require entity
Employment Activities
What to avoid:
- Hiring employees
- Paying contractors (without proper structure)
- Employment agreements
- Payroll setup
- Employment compliance
Why:
- Requires EIN and proper structure
- Employment law compliance
- Personal liability exposure
- Complex requirements
Pro tip: When in doubt, wait. It’s better to delay an activity than to create legal problems. See our anti-delay formation plan for timeline guidance.
Your Next Steps
Start safe activities now. Build your foundation. Launch faster after approval.
This Week:
- Review this guide
- Identify safe activities you can start
- Create your pre-formation checklist
- Begin foundation building activities
This Month:
- Complete market research
- Develop your product or service
- Build your brand and marketing materials
- Build relationships and gather feedback
Going Forward:
- Continue safe activities while waiting
- Prepare for entity approval
- Have everything ready for immediate launch
- Avoid risky activities until entity is approved
Need help? Check out our anti-delay formation plan for timeline guidance, our launch strategies guide for planning around delays, and our EIN guide for getting your EIN quickly after formation.
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FAQs - Frequently Asked Questions About What You Can Start Before Your Entity Is Approved (Legally and Safely)
What business activities are safe to start before your LLC or Corporation is approved?
You can safely conduct market research, develop your product, create branding and marketing materials, build a website, write a business plan, and set up social media accounts.
Learn More...
Market research including competitor analysis, industry trend studies, and customer needs identification involves no legal commitments and is pure information gathering.
Product or service development, prototyping, and testing are safe because they're personal projects until the entity exists, and you can transfer intellectual property to the entity later.
Branding work like logo design, website building (without sales functionality), and marketing material creation are creative tasks with no contracts or transactions involved.
Business planning, financial projections, process design, and operations strategy are pure preparation work that creates your launch foundation.
Why is it risky to make sales or accept payments before your entity is officially formed?
Making sales without a formed entity creates tax obligations, requires business registration, exposes you to personal liability, and complicates entity formation.
Learn More...
Without a legal entity, all income is treated as sole proprietorship revenue, making you personally liable for any disputes, returns, or claims arising from those sales.
Sales create tax obligations that must be reported, and without an EIN or proper business structure, tax compliance becomes complicated.
If a customer is injured or dissatisfied, they can sue you personally with no corporate liability shield in place.
It's better to wait until your entity is approved, your EIN is obtained, and your business bank account is open before processing any transactions.
Can I file for trademark or patent protection before my business entity is approved?
Yes, you can file for trademarks and patents as an individual before entity approval, then assign the intellectual property to your entity once it's formed.
Learn More...
Filing as an individual establishes ownership and protects your IP during the waiting period, which is especially important if you've developed unique products or branding.
Once your entity is formed, you'll need to formally assign (transfer) the IP to the business entity, which typically requires a written assignment document.
Consulting with an IP attorney ensures the transfer is done properly and your protections remain intact.
Documenting all your creations during the pre-formation period also strengthens your ownership claims.
Should I sign contracts or enter agreements while waiting for my LLC to be approved?
No, avoid signing contracts before entity approval because you'll be personally liable, contracts may not transfer to your entity, and legal complications can arise.
Learn More...
Any contract signed before entity formation is a personal obligation, meaning if something goes wrong, your personal assets are at risk.
Contracts signed in your personal name may not automatically transfer to your business entity, potentially requiring renegotiation.
If you absolutely must enter a contract, consult an attorney about using 'to be formed' language that anticipates the entity's creation.
The safer approach is to build relationships and gather information now, then formalize agreements once your entity is approved and you have proper legal protection.
What is a practical pre-formation checklist for the weeks before entity approval?
Weeks 1-2 focus on market research, idea validation, prototyping, and business planning. Weeks 3-4 cover website building, social media, and marketing materials. Weeks 5-6 are for networking and relationship building.
Learn More...
During weeks 1-2, complete your market research, validate your business idea with potential customers, develop an initial product prototype, create a business plan, and design your brand identity and logo.
In weeks 3-4, build your website without sales functionality, set up social media accounts, create marketing materials, develop a content strategy, and file for trademark protection if needed.
Weeks 5-6 are for attending networking events, building customer relationships, connecting with potential partners, gathering referrals and testimonials, and refining your product based on feedback.
This structured approach ensures you have a solid foundation ready for immediate launch once your entity is approved.
Can I hire employees or contractors before my business entity is formed?
No, hiring employees before entity approval is risky because it requires an EIN, tax setup, employment law compliance, and exposes you to personal liability.
Learn More...
Hiring employees requires a federal EIN, state tax registrations, workers' compensation insurance, and payroll systems that all depend on having a formed legal entity.
Employment law compliance including wage regulations, tax withholding, and workplace safety rules apply immediately upon hiring and carry significant penalties for non-compliance.
Without entity protection, you're personally liable for any workplace injuries, wage disputes, or employment law violations.
Wait until your entity is formed, your EIN is obtained, and proper employment structures are in place before bringing on any employees or paying contractors.
Sources & Additional Information
This guide provides general information about pre-formation activities. Specific legal requirements vary by state and situation.
For formation timeline guidance, see our Anti-Delay Formation Plan.
For launch strategies, see our Launch Strategies Guide.
For EIN information, see our EIN Guide.
Consult with legal and tax professionals for advice specific to your situation.
