Forgive me if I flub my legal terminology ... I'm in the very early investigative stages with this whole business thing.
Those of you who are simply one-person, out-of-house operations ... what form of business did you file for?
A co-worker who once owned a catering business told me I just had to file a "Doing Business As" form, but when I did some research I found that that -- while the simplest option -- would not protect my personal assets should someone decide to sue me. This makes me very queasy, especially since I own a home and have two small children. I certainly don't plan to get sued, but does anyone?
Incorporation seems too much. An LLC may be about right, but is that still too involved for a little part-time cookie business?
Any advice appreciated!
Incorporation is the smart thing to do, as it gives you a reasonably good shield between your business and personal funds. I'm an S-Corp, because LLCs weren't availaible in my state when I first went into business (not the cake biz) in 1992. It's really not all that difficult to incorporate. I hired an attorney who I later realized just used a standard "boilerplate" form. These can easily be found on the Internet, possibly on your state's Sec of State page.
I've since incorporated several other business and nonprofit groups and it's actually quite simple to do.
A family friend who is a lawyer has told me that using an online service to become an LLC or corp is perfectly acceptable (and way more reasonable than hiring a local attorney). I know of 2 businesses that have done it this way and seem quite happy with the outcome and price.
Leahs -- if you had it to do over again now, would you still file as an S-Corp or LLC?
You should definitely form an LLC or incorporate, which ever makes better sense for you to minimize personal liability. Often times, it is much easier to form an LLC. Many states permit you to file Articles of Organization for an LLC on-line However, you often have to mail or personally file the Articles of Incorporation for a corporation depending on your state. Also, many states do not require the filing of an annual report for an LLC, but do so for a corp. The filings are usually not time consuming, but do cost some $ and have to filed every year. To ensure that you truly insulate yourself from personal liability, you need to make sure you treat the business as a business and maintain all corporate records properly. In the event you elect to form an LLC, you can elect to be taxed as an S-corp or a partnership (this is where it helps to talk with a CPA to minimize your tax liability). Of course, you should check with a CPA or attorney familiar with NY laws.
I'd still do the S-Corp. The tax implicatins are the same, but I can keep money in my S-Corp as retained earnings. But, it may be that I'm more familiar with S Corp stuff.
Now I'm just the opposite of Leahs! After having my own bookkeeping & tax preparation business as an LLC, we decided to open our business as an LLC. It's very similar to an S-Corp. However, as far as the tax paperwork I need to do for the two of us, the LLC route was easier. You should really read up on them, consult with an attorney if you wish, talk to the IRS (they have a small business division and are really helpful if you tell them where you are in your tax knowledge), and/or your tax professional.
Paul & Peter