Question To Those Of You Have Home Businesses

Business By sccandwbfan Updated 24 Jan 2011 , 7:49pm by emrldsky

sccandwbfan Posted 23 Jan 2011 , 4:23pm
post #1 of 20


I would like to ask a simple question of the home business people:

Would you recommend starting a home cake business as a sole proprietorship or a limited liability corporation? From an accounting state of mind I'm familiar with both and know the difference and the plusses and minuses. How about from a cake state of mind my cake friends? icon_smile.gif



19 replies
ptanyer Posted 23 Jan 2011 , 4:32pm
post #2 of 20

I started mine as a sole proprietorship as I am a new business and doing only a cake or two a month at the moment since I have a regular full time job. If things change to the caking being a full-time job then I can change it to a LLC.

Hope that helps!

cakegirl1973 Posted 23 Jan 2011 , 4:54pm
post #3 of 20

I operate as a sole proprietorship. I have general liability insurance. I don't have any assets to protect. In my state, a sole member LLC & sole proprietorship are really treated one and the same from a liability standpoint. Your state may offer greater protection/advantages for a sole member LLC. I suggest you chat with an attorney. I also suggest that you carry liability insurance. My policy only costs $450/year, and I make quarterly payments. Very reasonable for peace of mind.

jason_kraft Posted 23 Jan 2011 , 6:12pm
post #4 of 20

Setting up an LLC is very easy and provides an extra layer of protection, and the extra fees/taxes are usually pretty low, so there's really no downside to creating the LLC.

jason_kraft Posted 23 Jan 2011 , 6:16pm
post #5 of 20
Originally Posted by cakegirl1973

In my state, a sole member LLC & sole proprietorship are really treated one and the same from a liability standpoint.

Which state is this? I don't see how the two business types can be equivalent in terms of liability, since in a sole prop the individual owns all the assets and in an LLC the business does, so the only way someone could get at the personal assets of the LLC owner would be to pierce the corporate veil due to mingling of funds (as 1 example) or a criminal act.

sccandwbfan Posted 23 Jan 2011 , 7:51pm
post #6 of 20

Thanks guys. Knowing the basics doesn't help as much as the experience you guys always share. icon_smile.gif

Thanks again.


leah_s Posted 23 Jan 2011 , 8:37pm
post #7 of 20

I'm old school - an S Corp.

jason_kraft Posted 23 Jan 2011 , 9:32pm
post #8 of 20
Originally Posted by leah_s

I'm old school - an S Corp.

You can elect to have your LLC taxed as an S Corp (or a C Corp) if you prefer. The default taxation method for an LLC is as a sole prop, or a partnership if there are multiple LLC owners.

cupadeecakes Posted 23 Jan 2011 , 10:22pm
post #9 of 20

I started as a sole p, but as I started doing weddings and paid off our home, I was at much more risk. Our best friend is a lawyer and he told me to go with an LLC. It wasn't hard to set up, but it was a pain in the a@$ to change all of my business licensee, bank account, and everything else. I wish I would have done the LLC from the begining. Also, I am with auto owners insurance and have so much more and better insurance than I had before. The business policy is $500 a year. I then got an umbrella policy for another million for$50/year. My business policy even covers if I can't work. Good luck!

costumeczar Posted 24 Jan 2011 , 12:18am
post #10 of 20

I'd go ahead and do the LLC, since when I switched from a sole prop to an LLC I had to go through the whole licensing process again, and it was just an extra step. Save yourself the trouble!

Kitagrl Posted 24 Jan 2011 , 12:31am
post #11 of 20

The house we live in is not ours, so I just do sole p...and carry liability insurance. If I owned my home and/or had significant investments, I would do the LLC thing but I don't see the need for now.

Annabakescakes Posted 24 Jan 2011 , 12:58am
post #12 of 20

I am looking into this right now as well. I googled "sole proprietor vs LLC" and "get" it, but at the same time, I don't. They both look good and bad, and I am not sure what will be right for me.

Can those of you who chime in, share WHY you have gone the way you have, and where you got your advice? I think that would be very helpful as well.

cakemom42 Posted 24 Jan 2011 , 1:00am
post #13 of 20

LLC is what we did & don't regret it. Jasonkraft is right.

cakemom42 Posted 24 Jan 2011 , 1:02am
post #14 of 20

We didn't seek advice just did our research and wanted to protect retirement/college funds & home. LLC was logical to us.

cupadeecakes Posted 24 Jan 2011 , 1:07am
post #15 of 20

Like I said above, our LAWYER said LLC is the best. Other than the annual cost, there is no downside for all of the protection.

KalliCakes Posted 24 Jan 2011 , 1:54am
post #16 of 20

I went with the LLC. Just makes the most sense and you have options when it comes to taxes.

costumeczar Posted 24 Jan 2011 , 3:23pm
post #17 of 20

Agreed, the LLC just gives you an extra layer of protection, as long as you follow the rules!

kristanashley Posted 24 Jan 2011 , 3:30pm
post #18 of 20

I only started in September, but I went with sole prop. to start with - I am very small scale, and I don't have the funds or see the need for an llc at this moment. Also, my husband is in the army and there is a good chance we will be moving in a year or two, so it's sole prop. for me. icon_smile.gif

cakemom42 Posted 24 Jan 2011 , 4:42pm
post #19 of 20

Kristanashley we are Army and I have moved my business 3 times in 8 years.. It's never a problem w/the LLC :0)

emrldsky Posted 24 Jan 2011 , 7:49pm
post #20 of 20

LLC as sole prop and I also have liability insurance. icon_smile.gif Good luck!

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