L.L.C. or Sole proprietor?

[urbanutopiasoap]

I'm in the early stages of starting my soap business. Ive been making many batches over the last few years, started selling bars over the holidays, adn have a few craft fairs under my belt but I heard I need a retail ID (and I need to figure out how to give the government the sales tax I charge). Ive done lots of research and I'm planning to file as a Sole proprietor or LLC. I think LLC will be the best choice (to protect personal assets) however, I worry this is a huge step and I'm taking it too soon(Since Ive barely even made a profit). Also, I normally file my taxes myself every year and I'm afraid now Ill need an accountant to help me. Any help on which way to go? Do you have an LLC and have advice? Thank you for any help!!
*Also I read you pay more in taxes on an LLC. True?

 

[boyago]

After being awarded a inheritance that involved a portion of a property I wound up using the same tax lady that my family was using. I will never go back to doing them myself again. The amount of money she has kept me from overpaying has always far exceeded the cost of her services. Unless you are incredibly savvy about taxes I would strongly recommend leaving it to a pro. BTW I am at or below the poverty line.
Not entirely sure about how to file your business. Allot of it has to do with liability and your plans for how to run it in the future. I would again encourage you to find a professional adviser. In my area there are SBA offices that give free advice and have free or low cost seminars on the subject what type of business to file as. That would be my first stop. They also tend to have veteran business people around that are happy to point you in a direction on just about anything.

 

[urbanutopiasoap]

Thank you so much! Ill look into that.

 

[shunt2011]

I'm a sole proprietor. I do have my taxes done with my reguar taxes. It's so much easier. I had always done our taxes until I started my business. Laws are different from state to state and city to city on requirements. I don't have to have anything but a sales tax license. Also, remember to be sure to have insurance. If you are selling you really need to protect yourself.

 

[FGOriold]

An LLC will not protect your personal assets if you as the owner are found to be personally negligent in causing harm to others. It will protect you from debts you owe for business expenses/loans should your business go under or something like that. You will still need liability insurance should you form as a sole proprietor or LLC.

 

[urbanutopiasoap]

FGOriold that's good to know! I was under the impression I would be much safer under an LLC...which was really the only reason I was leaning that way. To clarify: An LLC doesnt offer me more protection as far protecting my personal assets if I were to get sued. Correct? Also, any business insurance recommendations? Thank you all for taking your time to help!

 

[shunt2011]

There are a few options for insurance. 1st check with your personal insurance and see if they will cover a home business. 2. RLI as long as sales remain uner 5,000 per year. 3. Handcrafted Soapmaking Guild 4. Indy Beauty. I have mine through HSMG and it's was 500.00 per year. They just dropped it by 20.00 starting March 1 I believe it is.

 

[new12soap]

An LLC may provide you with additional layers of protection, but there is no one-size-fits-all when it comes to sole proprietor or LLC. I would strongly urge you to consult with the SBA and/or an attorney. They know what questions to ask for your particular situation and are much better able to make a recommendation best suited to your needs.

 

[urbanutopiasoap]

Thank you for the insurance recommendations! Thank all of you for your time!!!

 

[Lindy]

With an LLC or in Canada an incorporation you personal assets are protected and only business assets are at risk.

ETA - Many, many years ago I was a collections paralegal and if we were going after a business that was an incorporated company all we could go after were the business assets, with a partnership or sole proprietor everything was up for grabs....