In this instructional video, Zach Saffron warns entrepreneurs that forming an LLC without careful attention to certain details can severely limit access to business credit and result in missed funding opportunities worth tens or hundreds of thousands of dollars. He outlines five common, costly mistakes: (1) choosing a high‑risk LLC name that includes terms like real estate, crypto, or cannabis, which triggers banks' automated risk filters; (2) selecting the wrong industry classification, where low‑risk categories such as consulting are preferred over high‑risk ones like real‑estate investing or e‑commerce; (3) using an inappropriate SIC/NAICS code, recommending specific low‑risk codes (e.g., 541611, 541618, 541990, 561320, 541512) that banks view favorably; (4) opting for the wrong legal/tax structure, advising formation of an LLC with a later S‑corp election to provide separation and credibility; and (5) forming the LLC in the wrong state, generally suggesting the entrepreneur’s home state unless geographic banking considerations justify a different state like Florida. He emphasizes that these decisions form the foundation of a funding strategy, and getting them right can unlock 0% business credit ranging from $50k to $250k, while errors cannot be remedied by credit repair. The video ends with a call‑to‑action to his services and a request for engagement.
Chapters
So if you're planning on setting up a new LLC this year to access business credit, first off, good move. But if you're not careful, you could make mistakes that cost you tens, even hundreds of thousands in missed funding opportunities. Now, most people treat LLC formation like a formality, something they can Google and knock out in 15 minutes. But when your goal is funding, real capital, real leverage, every detail matters. So in this video, I'm going to walk you through the 5 most common and costly mistakes I see entrepreneurs make when setting up an LLC. I've put them in a random order because the 5 are equally important. And if you avoid them, you'll be miles ahead of the average business owner. So mistake number 1, choosing a high-risk business name. If your LLC name includes the words real estate, investing, crypto, capital, or cannabis, you've already made the process harder than it needs to be. Now, banks use automated risk filters that are gonna flag certain industries long before a human underwriter ever sees your application. And once you're labeled as high risk, it's very hard to reverse that. So that's why for funding purposes, put the name as neutral and boring as possible. Smith Consulting LLC, Johnson Holdings, Martinez Enterprises. These names tell the bank nothing about what you do. That's exactly the point. Later on, you can always register a DBA for marketing purposes or branding, but if the LLC is going to be your funding vehicle, de-risk it from the start. Now, mistake number 2: picking the wrong industry classification. Now, when you form your LLC, you'll be asked to select your business category or industry. This one choice can either unlock capital or kill your access to it. Banks don't just underwrite based on credit. They value the risk at an industry level. Consulting or professional services and business management, these are all seen as low risk. But categories like real estate investor or a lessor of residential buildings or trading or e-com, they often trigger instant denials. And if you're not sure what to choose, consulting is usually the safest play. It's broad, low risk, and it gives you flexibility. You can always run your business however you want. But if you want the banks to give you $50,000 to $250,000 in 0% business credit, don't shoot yourself in the foot by picking the wrong industry code. Mistake number 3, Using the wrong SIC code. Most entrepreneurs don't even realize that this part exists. One of the most common funding killers I see. Now, NAICS codes and SIC codes are how banks categorize your business behind the scenes. Now, these 6-digit numbers are tied to risk models. The wrong one can disqualify you before an underwriter even sees your file. Now, if you're applying for maximum fundability, here are some of the best codes to use. 541611, which is administrative and general management consulting. This is the one I recommend to everybody. It's low risk, it's flexible, it's broad, doesn't say a lot about your business. And again, that's the whole point. And also use 541618, other management consulting services, or you can use 541990, other professional, scientific, and technical services. You could also use 561320, temporary help services, 541512, computer system design services. I could go on, but these categories are low-risk, bank-friendly, and associated with stable cash flow. Avoid codes tied to real estate, investment, crypto, gambling, cannabis, anything like that that screams high-risk, volatility. Again, we're not optimizing for accuracy here, we're optimizing for approvals. Now, mistake number 4: choosing the wrong legal structure. If you're forming an LLC and you just leave it as a sole proprietorship or a partnership, you're sabotaging your own funding before you even start. Banks want to see a separation between you and your business, and if your entity is taxed as a disregarded entity, it's harder to justify business credit and much harder to scale. The better play: form an LLC and then work with your CPA to elect S-corp status when the time is right. That move can unlock several advantages, which is credibility with lenders, clear separation of personal and business finances, stronger legal protection and tax flexibility. And these differences between getting denied or getting approved can often come down to structure. If you're serious about building a business like a real business, start by treating it like one. Mistake number 5: forming your LLC in the wrong state. Now, in 99% of cases, you should form your LLC in your home state. That's where you live, where you'll file taxes. And if you're trying to hack your way around it, usually it backfires. Now, that being said, your state does influence which banks you have access to. For example, many of the best business credit cards and lines of credit come from banks on the East Coast. You live in a region where those banks don't operate in, you might face geographic limitations. So if you're planning to use your LLC exclusively as a funding vehicle, you're willing to go the extra mile, there are cases where forming in a state like Florida can be really helpful. Just opens more doors. But for most people, your home state, perfectly fine. Just know that the location plays a role in the lender access, so plan accordingly. Now, setting up your LLC is more than just paperwork. It's the foundation of your funding strategy. And if you get these 5 things right— name, industry, code, structure, and state— you'll be set up to unlock tens of thousands or even hundreds of thousands in 0% business credit. Now, get them wrong, no amounts of credit repair or tweaking will save you. Now, if you're serious about building a business designed to access capital, not just exist on paper, then take those setup decisions seriously. Now, my name is Zach Saffron. I work with entrepreneurs who are ready to use funding the right way. Now, if that's you, check out the links below to learn how we help clients unlock 6 figures of funding step by step. And if you found this valuable, like, drop a comment. I'll see you in the next video.
