Anyone have two legal at-home business? Like caking and crafting? I operate under the Texas Cottage Food Law now, and I also enjoy sewing. I've thought about selling some of my projects. I wanted to see if there was anyone out there who does both. I'm not busy with my cake business, and don't want to get very busy right now while my kids are so young (almost 5 and almost 2). Sewing is something I can do in a much shorter time-frame than a cake, so I'd love to do some projects during nap time and make a little cash.
So I guess my main questions are:
1. Am I crazy? haha
2. Do I need a separate tax ID and DBA?
3. Is this an accounting nightmare at tax time?
I'd love to hear from someone who has actually done this, please! Thanks!
We have a B&B, rental houses and the cake biz. You do need to keep your accounting straight. You set of one corp and then as many d/b/a s as you need.
Thanks, Leah. Right now, I'm operating as a sole proprietor with a DBA for my cake business. I wonder if I would have to do an LLC to set up 2 different businesses. Off to do some research. If anyone else has experience with this, please post! I'm not looking to make more than a couple hundred a month from each, so I need to do what is most cost-effective.
You can set up as many sole props and DBAs as you want without an LLC, but if you are running a business with a large liability potential (i.e. selling food) then you will want an LLC for at least that business. Once you set up an LLC you can use it as a liability shield for all your businesses by having the LLC own the business instead of yourself.
I'm not claiming to be an expert, but f4rom what I understand if you set p a DBA under another company, the "mission" of the company still has to be related to the original. This is what I was told when I set up mine, at least. I have a LLC for a non-food related company. I was told by a lawyer (and the IRS concurred) that if I were to sell cakes (which I don't because of my state) I would have to file/start a separate company because selling food does not fit in with the business description for the original LLC, not to mention the separate liability issues.
I've never heard about a rule relating to the mission of a business (if true this could easily be circumvented by using a very generic mission), but in my research I found a few things I did not consider before.
Having multiple LLCs separates the businesses from each other's liability, so if there is a judgment against the cake business you can limit the liability to the assets of the cake business and declare BK if necessary without affecting your other businesses. Also if you decide to sell one or more of the businesses it will be much easier if they are not co-mingled.
The crafting business is pretty low-risk so you should be OK setting up a sole prop owned by you (without an LLC), it would still be a separate entity from the cake business which would be a d/b/a owned by an LLC.