Business License, Llc, Or Nothing?

Business By jfraelich Updated 16 Sep 2017 , 1:55am by MamaGeese

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jfraelich Posted 23 Aug 2017 , 10:58pm
post #1 of 3

Hi fellow cakers!

I live in a state with Cottage Law, and I currently have not obtained my business license and have not formed an LLC. Not having a business license has only prevented me from working with one bride to date, but losing one is one too many!

Is anyone willing to share benefits they've reaped from obtaining a business license or forming an LLC? Is getting a business license better than forming an LLC? 

I find the process confusing and the information about the process less than straight forward. Any insight, feedback, and guidance you can give is GREATLY appreciated!

Thank you! :)


Jessica

2 replies
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johnson6ofus Posted 24 Aug 2017 , 3:13am
post #2 of 3

Each state is different, so where you are makes a difference. Not all require/ create a "business license" some just have you file DBA.

I think what you are asking is what documents/paperwork make you look more like "ABC cake company" rather than "ABC back door garage cakes with dog hair in it".  You hope that having some "documents" will show a prospective buyer that you are a "real" company. Right?

The bride may have used that as an excuse, or another baker threw you under the bus. Waiving "credentials"  rather than the merit of the cake artist works sometimes.

Get an "EIN". Free from the IRS, but now you have a registered "employer identification number" with the federal government. Get a DBA----usually a filed record in your county ($20-$40). Get a food safe handle certificate (some free on line, after taking a course) .  These documents separate you, in a lay person's mind, as a "real" business. All for minimal expense.

BUT, it is still important to complete all the processes your state/county require to operate under their cottage food laws.

I am just addressing it from a "marketing" position, not a "avoid the laws" position.

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LLC is a whole other thing. It is really to help protect your assets if you get sued. Don't get me wrong, I think insurance is IMPORTANT. BUT, it is hard to pay for early on. Do you own property? Do you have assets that can be awarded to a plaintiff if they sue and win?

The question is....what happens if someone says your cake made them sick and they sue?  How will you handle that?

IF YOU HAVE ASSETS TO PROTECT, then the investment in LLC filings and insurance become increasingly important.

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MamaGeese Posted 16 Sep 2017 , 1:55am
post #3 of 3

To be honest, I've had my cottage food license for a year and a half and I am still as confused as ever. I did all the forms, fees, and all the other hoops you have to jump through. Today my head was spinning trying to handle all this....this business is costing me a fortune! Most creative people are not good business people...I'm beginning to consider finding something else to do. I can't handle all this red tape and when I was starting most of the people I went to for advice had no idea what to tell me. I had to explain to them about cottage laws, etc. I'm constantly afraid I'm doing something wrong or forgetting something. This is insane .....you don't make enough to buy in bulk, (who has a place to store 50 lbs of anything?) I didn't expect it to be easy, but then I know about 5 people in my area who have no license and are doing a booming business without the headaches. They make get caught one day, but then what? Do they really ever prosecute Aunt Bertha for baking a cake for her niece? So much talent is being squashed in this country today because the government has your hands tied....I remember my grandmother making cakes for people decades ago, so did a lot of people, it would never had occurred to them they were breaking the law. I'm just sick about it, there are just so many headaches with the whole thing...just venting folks. 

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