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Teach Soap • View topic - question

Teach Soap

Soap Making Recipes, Tips and Tutorials
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 Post subject: question
PostPosted: Mon Feb 07, 2011 6:20 pm 

Joined: Mon Jan 03, 2011 10:15 am
Posts: 114
LLC or Sole prior??? I'm not sure which one to file under. I plan to run the business myself......so which do soapmakers usually file under? Very confused.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 6:26 pm 
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Joined: Mon Jan 14, 2008 11:14 pm
Posts: 24336
Location: Mistress Of Lather
I would talk to your accountant. :)

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Closed minds are like faulty parachutes; they refuse to open.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 6:56 pm 

Joined: Wed Jan 19, 2011 10:22 am
Posts: 114
Location: Ocala, FL
I agree...talk to your accountant. I have 3 businesses in Fl registered under my name but all as sole. It is easier to get workmen comp exempt and easier to file taxes in my opinion. If it is going to be a small business I recommend not forming an LLC or Inc. It just means more paper work and its harder to stay under the radar....which is where I like to be. :)

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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 7:03 pm 

Joined: Mon Jan 03, 2011 10:15 am
Posts: 114
Thanks, I've gotta hire one first lol!


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 7:08 pm 
If you do sole proprietorship vs LLC your taxes will not be that much different. However, if you ever get insurance, it'll be a huge difference. A sole proprietorship is better if you're a small time, selling soap out of your home type of person. LLC is better if you're going to be hiring 20 to 30 people over the next couple of years and are selling soap to 50 different retail outlets coutrywide. Insurance costs for a LLC vs a SP is night & day. I've been through this about a dozen times in the past 3 years. Trust me, get the SP if you're just starting out.....you can always change as you grow.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 7:14 pm 

Joined: Sat Jun 26, 2010 10:22 am
Posts: 61
Yes talk to an accountant or even a lawyer.

An LLC does not necessarily mean more paperwork. I chose to form an LLC because of liability benefits. Doing so keeps my personal assets seperate from the business's. But, as an LLC, I have the choice to file taxes as a sole proprietor, a C-Corp or an S-Corp... so, if you set up a LLC but file taxes as a sole proprietor there is no more paperwork or complexity... at least when it comes to the feds.

However, LLC's are different state by state. Depending on where you live, there may be more requirements for you at the state level. In my state, LLCs and Sole Pros have identical requirements.

Cant you get insuance through HSMG for the same rate? Or are to talking about a different type of insurance?

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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 7:41 pm 

Joined: Wed Jan 19, 2011 10:22 am
Posts: 114
Location: Ocala, FL

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Melissa


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 7:42 pm 
You have the choice of filing as a SP if your TI doesn't go above a certain amount. It's unlikely that hitting that amount will occur by selling soap out of your house. LLC's are better if you're likely to face an E&O lawsuit (errors and omissions) because yes, they do separate assets. Selling soap for craft shows and to people at work, an LLC isn't needed. True, each state tax laws vary. But federal is the same. Talk to a tax attorney if you feel the need....but I'm sure he's going to reiterate what you heard here.

I'm not being boastful but I own over a dozen businesses. Two of them are nationwide companies with over 36 branch offices. The rest are smaller, businesses within the state. My wife & I own all of them outright but manage none of them directly, but we still make the insurance and tax decisions. As a soap retailer out of your home, go SP. If you grow, then change.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 8:12 pm 

Joined: Sat Jun 26, 2010 10:22 am
Posts: 61

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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 8:33 pm 
I have to agree with Supersoaper. The reason you do not want to jump up and do an LLC first is insurance. My husband and I (before divorice) had a small contracting company with about 6 full time workers and 2 or 3 part time. We listed as an Sole Prop at setup becuase that is what our accountant said to do. And operated that way for 3 years. One of the workers mad a mistake that caused some damage to a persons home. Rather than turn it in to insurance, we fixed the problem. From that incident we were afraid that we could stand to lose everything if we were sued so we changed to an LLC. We could not afford the insurance because it went up over 50% overnight.

If you have a multimillion dollar mansion and private jets and a yacht then do the LLC. If not then I would recommend the Sole Prop.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 8:38 pm 

Joined: Mon Jan 03, 2011 10:15 am
Posts: 114
Thank you, thank you everyone that posted! I need all the advice I can get.


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 Post subject: Re: question
PostPosted: Mon Feb 07, 2011 8:51 pm 
The bottom line is that you should not be taking advice from us. Soapbuddy and Luvsoap26 are correct. We don't know your current situation or what your future plans are. A professional, can better advise you than us. We all have different experiences with our situations, but only you know what is good for you. A lot of accountants don't charge for this sort of advice and can advise you over the phone. My accountant doesn't charge me unless he has to use a calculator to answer my questions. Get professional advice and good luck.


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