I've noticed a few people mentioning becoming LLCs. I'm in the process of jumping through all sorts of hoops right now and I'm getting my inspection next week and next up is insurance. As far as I can tell, becoming an LLC is in my best interest but I just don't have an extra $500 lying around right now. Is it a necessity? Can I get insurance without it?

You can get insurance without it, but take it from someone who started as a sole proprietor then switched over to an LLC, it's easier to do an LLC in the first place. You end up having to go through the same paperwork with business license, etc. again if you switch to an LLC, and it's just a pain in the butt. If you're REALLY short of cash you can do without it for a while, but it does protect you more to be an LLC, and it really is easier to only have to do the paperwork once.

Your corporate structure is one of the most important things you do. It's what protects your personal assets from a claim on your business. Why on earth would it cost $500? You can get the forms from your Secretary of State (well you can in my state) or from various websites. It's all standard stuff. The filing fees in my state are less than $20.

I'll have to look into the fees...maybe it won't be as much as I thought. I read somewhere that it was like $300 and then they recommend having a laywer file it which is where the other $200 came from.

ok, I found it...I can file for $150...I guess that it is easier to bite the bullet and just do it all at once

Nah... you can easily do it yourself. It cost me about $150 to file the paperwork. It's piece of mind that I wouldn't trade for the world.

All I had to do to form my LLC was to go down to the Secretary of state office fill out a form and pay the $125 fee. And with insurance try calling State farm and all you have to put down is a down payment mine was $20.00. Its funny how scared I was to start my home business, and It really wasn't that hard or expensive. Good luck

when filling out the paperwork yourself what category do you list your business under.

initially i thought Bakery - but i wont have a storefront?
other options are
Catering
Food Processor/Manufacturer
Food/Beverage Vendor

I live in Oklahoma and the fee is $100, I think that's pretty high and in my state you can't get a sales tax id without your Articles Of Organization. You cannot be a business witheout being an LLC or having a tax id number.

Texas is $300, and that's the fee to do it yourself.

You know you can also be a "S" Corp. That's what I am.

I have an S Corp currently for a completely different business, but I was told by my accountant that I can add another business under that same S Corp, which is what I'm planning on doing with my cake business.

I still, however, am entirely confused as to what the difference between having an S Corp or an LLC is and if one is better than the other for a cake business.

The differences is the way you have to file taxes and the accounting part. If you don't have an accountant, blind call and ask what would be the best for your business! (I know with a C corp, you have to account for EVERY penny coming and going - lets say you want to pull money out but not in a paycheck, you would get a dividend and have to pay tax on it through the company and personally.)

The dividend thing works that way in a S corp also. A C corp is taxed at a corporate rate. You need to be a really big corp to make that work for you. And I mean big like Ford. With a S the profit (income - expenses) flows through to your personal income and is taxed as personal income.

I think S is easier than LLC, but it may be because I'm more familiar with S.

someone out there said to categorize the business as "catering" for LLC/ins purposes....is that how you do it?