jena2727 Posted 16 Jan 2012 , 9:14pm
post #1 of

I am just starting out and would like to go ahead and get a business license before I go any further. I have looked up the Cottage Food Laws in my state (FL) and County (St. Johns) and know what I need to do to be 'Legal' but am stumped as to whether I should just register a Fictitious Name for now and then become an LLC as my business grows or just start with the LLC? Any suggestions? I am in the process of researching the difference and benefits but wanted the advice of those have have done either.

Thanks for any input!!

13 replies
MimiFix Posted 16 Jan 2012 , 9:21pm
post #2 of

How exciting! But the first thing I would do is check to see that your state allows a home-based business to have an LLC. In NY, where I live, this form of business is not allowed for a home food processor.

jena2727 Posted 16 Jan 2012 , 9:40pm
post #3 of

Thanks!! Yeah, from what I have read it appears to be allowed but it seems like a lot of work, forms, contracts and cost! I think I may have quickly made my decision to start as a Sole Proprietor! Now to find a name icon_cry.gif

justsweet Posted 16 Jan 2012 , 9:58pm
post #4 of

Also, check with your insurance company your home owners insurance their is a higher chance your business will not be covered if something happens to your tools or someone takes you court. With LLC your home, car, etc are separate from your business. Talking to my account if CA passes the cottage food law he recommends having an LLC to protect me. It is a decision you will need to make and if you decide to change your fictitious name later to LLC and someone else all ready has that name as an LLC you will have to find a new name. Happen here at my work even though the owner had business ***** DBA ***************** for 15 years. Just a thought and good luck with your new adventure

jason_kraft Posted 16 Jan 2012 , 10:47pm
post #5 of
Quote:
Originally Posted by MimiFix

In NY, where I live, this form of business is not allowed for a home food processor.



NY really doesn't allow a home food processor to be an LLC? That doesn't make much sense to me, since business organizations are handled by State, not Ag.

jason_kraft Posted 16 Jan 2012 , 10:51pm
post #6 of
Quote:
Originally Posted by jena2727

Thanks!! Yeah, from what I have read it appears to be allowed but it seems like a lot of work, forms, contracts and cost!



Starting an LLC is actually much simpler than it looks. If you still need help you can go to someone like Legalzoom, who will charge $100 (plus the $125 state filing fee) to guide you through the process.

http://www.legalzoom.com/llc-state-requirements/florida-llc.html

Considering the minimal cost it's definitely worth it to get the LLC, here in CA an LLC costs $800/year. Don't forget liability insurance as well.

MimiFix Posted 17 Jan 2012 , 12:28am
post #7 of
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by MimiFix

In NY, where I live, this form of business is not allowed for a home food processor.


NY really doesn't allow a home food processor to be an LLC? That doesn't make much sense to me, since business organizations are handled by State, not Ag.




Of course it doesn't make sense. Lots of their regs don't make sense. Please don't get me started, this is a public forum, women and children may be watching....

jason_kraft Posted 17 Jan 2012 , 12:50am
post #8 of

Is the no-LLC rule in NY AGM 276.3 (I can't find the text of that code online)? I just find it hard to believe that a 20-C exemption would involve an investigation of the type of business entity, since that info is not mentioned anywhere on NY's home processor page.

Especially considering that you would probably get the 20-C exemption before you even file for an LLC, and from the perspective of Ag there is no functional difference between a sole prop and a single-member LLC.

MimiFix Posted 17 Jan 2012 , 1:41am
post #9 of
Quote:
Originally Posted by jason_kraft

Is the no-LLC rule in NY AGM 276.3 (I can't find the text of that code online)? I just find it hard to believe that a 20-C exemption would involve an investigation of the type of business entity, since that info is not mentioned anywhere on NY's home processor page.

Especially considering that you would probably get the 20-C exemption before you even file for an LLC, and from the perspective of Ag there is no functional difference between a sole prop and a single-member LLC.




You're right, Jason, it's nowhere to be found. I learned this from one of my students who had finished the paperwork for an LLC and then called for an inspection to get the home processor permit. She had the paperwork on her kitchen table when the inspector arrived. The inspector told her it was not allowed.

I called Albany to ask for clarification and after being passed through to several people who knew nothing, I was told by an irate supervisor that the intent of the exemption is to keep businesses small and therefore the LLC was not allowed. I don't understand the connection but that's what I was told.

Did you see the rule about no website presence? No presence at all because businesses need to stay small. They won't allow any presence, not even for communicating with customers. Hundreds of home processors have websites anyway, but two of my students actually got Cease & Desist orders for having one.

Now you got me all riled up... I wrote a couple of blogs recently about NY Ag & Mkts and their inconsistent enforcement. http://bakingfix.com/thefix/?p=5906 and http://bakingfix.com/thefix/?p=5949

MimiFix Posted 17 Jan 2012 , 1:43am

sorry, duplicate

costumeczar Posted 17 Jan 2012 , 1:53am

Personally, if you're intending to convert to an LLC at any point, I'd go ahead and do it from the beginning. I changed from a sole prop to an LLC and it was a huge pain in the butt. You basically end up doing all your paperwork again and filing for all of the same ID numbers and sales tax numbers and other numbers again. Just do the LLC and get it over with once.

cupadeecakes Posted 17 Jan 2012 , 2:19am

I agree with costumeczar. I went from a sole prop to an LLC and it was more of a pain than if I had just made the jump to an LLC from the get go.

Having an LLC is very important in keeping "your" assets separate from your "business" assets. It all seems so pointless until you're on the ugly end of a lawsuit. I have never been sued, but our best friend is a bankruptcy attorney and does his level best to keep us as financially safe as possible.

Good luck!

jason_kraft Posted 17 Jan 2012 , 3:09am
Quote:
Originally Posted by MimiFix

You're right, Jason, it's nowhere to be found. I learned this from one of my students who had finished the paperwork for an LLC and then called for an inspection to get the home processor permit. She had the paperwork on her kitchen table when the inspector arrived. The inspector told her it was not allowed.



The fact that it was a rogue inspector makes a little more sense...personally I would have filed for the LLC anyway, if the state sent a C&D on those grounds it would be easily appealed by asking for the section of NY code that prohibits an LLC for home food processors.

Quote:
Quote:

I was told by an irate supervisor that the intent of the exemption is to keep businesses small and therefore the LLC was not allowed.



This is especially ironic, since one of the primary reasons the LLC structure was created in the first place was to allow small businesses to more easily get the benefits of a corporate veil without having to jump through hoops to set up a full-fledged corporation.

jason_kraft Posted 17 Jan 2012 , 3:11am
Quote:
Originally Posted by MimiFix

You're right, Jason, it's nowhere to be found. I learned this from one of my students who had finished the paperwork for an LLC and then called for an inspection to get the home processor permit. She had the paperwork on her kitchen table when the inspector arrived. The inspector told her it was not allowed.



The fact that it was a rogue inspector makes a little more sense...personally I would have filed for the LLC anyway, if the state sent a C&D on those grounds it would be easily appealed by asking for the section of NY code that prohibits an LLC for home food processors.

Quote:
Quote:

I was told by an irate supervisor that the intent of the exemption is to keep businesses small and therefore the LLC was not allowed.



This is especially ironic, since one of the primary reasons the LLC structure was created in the first place was to allow small businesses to more easily get the benefits of a corporate veil without having to jump through hoops to set up a full-fledged corporation.

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