John Hertzfeld Posted May 24, 2015 Report Share Posted May 24, 2015 Ok as a jump from my insurance question. Who is running as a Sole Proprietorship and why? Same for LLC. Are there tax benefits to sole over LLC? I know that it is simple to establish an SP, really just registration of name (in Ohio), how hard is an LLC to establish. What are the associated costs? Link to comment Share on other sites More sharing options...
S. Dean Posted May 24, 2015 Report Share Posted May 24, 2015 Here's a past thread with some info - more of a limited liability/protection of personal assets issue rather than a tax issue. http://community.ceramicartsdaily.org/topic/245-sole-proprietorship-or-other/?hl=%2Bsole+%2Bproprietorship Simple LLC's are pretty easy and inexpensive to set up. However, the laws and requirements vary from state to state. Since you are in Toledo, you would need an OH licensed attorney. Call several small law firms in the area and find one that handles this kind of work. They will also advise you on the formalities you need to follow when you do business as an LLC. Please note, forming an LLC doesn't mean that you don't have to carry general liability insurance for your business. Filing Fees for OH are here - looks like $125 to file your articles of organization. http://www.sos.state.oh.us/SOS/upload/business/filingformsfeeschedule.aspx?page=251 Link to comment Share on other sites More sharing options...
GEP Posted May 24, 2015 Report Share Posted May 24, 2015 Here's another thread that discusses sole proprietorship vs LLC. http://community.ceramicartsdaily.org/topic/7399-pitfalls-and-must-haves/?hl=%2Bsole+%2Bproprietor&do=findComment&comment=70318 My personal choice is sole proprietorship. I like to keep things simple. And after 13 years in business, I have yet to find any potential for issues that would require me to protect my assets. Link to comment Share on other sites More sharing options...
DirtRoads Posted May 24, 2015 Report Share Posted May 24, 2015 I've used Legal Zoom to set up LLC's but the last several I've just filed the form myself, skipping the service. In the early days I paid an attorney to do it. We used to set up a separate LLC on every store and piece of real estate. I still put real estate in separate LLC's. I've had several issues arise and never had an LLC set up disputed because it was done with Legal Zoom. We had several threats of law suits over the years and only one actually filed concerning a business practice, which our attorney handled with just one letter. This was filed against the LLC and no names were mentioned. The lawyer told them the LLC had no viable assets and we never heard from them again. One other incident where our liability insurance company paid $25K to settle out of court on an auto accident in a business owned vehicle. Also, we got out of a couple leases by being in an LLC. There are a few states in which the corporate veil has been pierced. None in Mississippi except in the event of fraud. Looks like the same issue in Ohio. https://litigation-essentials.lexisnexis.com/webcd/app?action=DocumentDisplay&crawlid=1&doctype=cite&docid=57+Clev.+St.+L.+Rev.+951&srctype=smi&srcid=3B15&key=a4d2f621473b32a6bbca889448a56e69 http://info.legalzoom.com/form-llc-ohio-3386.html or another similar set up company http://www.totallegal.com/llc/llc.aspx?src=mohfr1 Looks like Ohio is pretty straight forward in set up. Looks like you just get one form from The Secretary of State. From reading you have to have that form. We had those mall stores and there was constant risk of law suits. We were required to carry liability insurance which I think was 5M. I think liability insurance, which is mentioned in another thread, is a good practice. My brother is in insurance and says all the lawsuits he has seen filed only go for the liability limit of the policy. Most (my brother has seen 100's of lawsuits filed and NONE by a paid up front lawyer) of these insurance claims are filed with a contingency fee lawyer. Most people are not willing to come up with $10k-$25K to secure representation. If you have the liability insurance, the issuing company will handle the law suit threat. Like Gep pointed out ... a pottery business is a simple business. A simple liability policy is probably all you would ever need. But a LLC is fairly simple and cheap to set up. Looked this up http://www.sos.state.oh.us/sos/upload/business/forms/532a.pdf $125 filing fee if you complete it yourself. Those services will add a bit to that fee for doing it for you. Might be worth it to pay one those services to do it. Link to comment Share on other sites More sharing options...
Mark C. Posted May 24, 2015 Report Share Posted May 24, 2015 I'm a sole proprietorship as in my state that was my best option back in the 70's when I set it up.Thats not a typo-the 1970's I would consult your tax account for your particular needs. States vary so much on this. some other things needed- Resale permit-busnisess liablity insurance-DBA filing -all part of the deal. As noted pottery business is a simple business. My tax document was only 65 pages with 20 forms last year-a simple deal for a good tax account. Mark Link to comment Share on other sites More sharing options...
Dennis Bednarek Posted May 25, 2015 Report Share Posted May 25, 2015 I ran a none pottery related business with a store front for roughly 5 years as a sole proprietorship. I had no problems until my landlord pulled out a maintenance clause and opened a law suite on me. We ended up in court and while the courts only gave him a fraction of what he originally requested it was a mess. My attornies informed me that if I would have my business as a LLC he probably would not have gotten anything. Link to comment Share on other sites More sharing options...
rakukuku Posted May 25, 2015 Report Share Posted May 25, 2015 A corporation or llc is definitely worthwhile if its not hideously expensive in your state. here in california it costs $800 per year to have such an entity. Not a small business friendly state. I have a general partnership with my husband but i don't do craft fairs - only galleries. still i would do the llc if it was not so costly. rakuku Link to comment Share on other sites More sharing options...
Joseph Fireborn Posted May 25, 2015 Report Share Posted May 25, 2015 It depends on your state. The best way to go about it is to contact an accountant for tax purposes to see which is better, and contact a lawyer to make sure it has protection for what you need. In Georgia where I live, anyone can start an LLC over the states website for $100 bucks a year. It is easy as pie, I have made numerous ones for different businesses in the past. However some states are much harder and cost a lot more. Link to comment Share on other sites More sharing options...
GiselleNo5 Posted May 25, 2015 Report Share Posted May 25, 2015 here in california it costs $800 per year to have such an entity. Not a small business friendly state. rakuku Yeah ... I've been noticing this and I wondered if it was just my imagination. Many of the small towns in this area have recently passed laws that if you sell at a craft fair even for ONE DAY, you must have a business license for the year for that town. If I make sales deliveries to local customers, I must have a business license for that town. Etc., etc., it's all about money. What it's doing is keeping little businesses like mine from participating in local craft fairs! If I want to do the local fair circuit, I would need to maintain 5-10 yearly licenses. Perhaps it's worth it, but oh the paperwork! Link to comment Share on other sites More sharing options...
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