Ready to sell - now what? :)

[chicklet]

Okay, I've been soaping for six months and I read and researched a while before that. I've made a ton of soap the past six months (maybe not literally, but I've made around 75 batches). I've tested and tweaked and experimented and adjusted, and, while I will continue to learn and perfect this craft, I feel that I am ready to start selling.

And I have some questions.

My niece works for a lawyer and I thought he was going to help me through the "getting legal" phase but it doesn't look like that's going to happen. I know every state may be different as far as rules and regs, but what's the usual order of things when you start a home based business? I mean, what comes first - do I register my company name with the state first? I live in TN and there is an online manual about starting a small business, but it's really not very helpful. Do I have to form a corporation (or LLC more likely) or is that optional? I checked out the RLI page for insurance, but noticed there was a place to check if your company is a corporation or LLC (and I think there were more options) but I'm not clear on whether or not you have to be a formal organization or not.

Am I overcomplicating things? I know there has been discussion here before about whether or not liability insurance is even necessary, but for me it's absolutely necessary. I'm just not sure if that's all I need to do at this point or do I need to go through all the other steps.

Thanks for any input!

 

[SoapPapaw]

Chicklet, where in TN do you live? I lived there for many years. In fact we Big Orange football fan.

 

[chicklet]

I'm in Lawrence County - southern middle.

 

[melstan775]

This is a loaded question lol. If you don't know how to register your company or what kind of legal form it should be, you are not ready to start selling. Part of a successful business is knowing about business. Do you know what an LLC is or why it would or would not benefit you as a business entity? it will protct your personal assets in case of a lawsuit, but will you need it? You can't hide behind a business name if you accidently do something illegal, so you need to know what each kind of business type can do for you and decide if you even want to incorporate at all.,

If you plan to run specials on product do you understand how and why of add-ons and discounting? Do you have a marketing or business plan? It doesn't have to be complicated - just a few pages explaining to yourself the ways you plan in finding and keeping customers and how you plan to sell should do it. If you're just selling online and at fairs once in awhile, thats a much smaller operation then a table at every fair and event every weekend, for example, so you should write down what you plan to do so you have a a concrete visual of where you are going. It makes seeing everything else easier.

 

[chicklet]

Thanks for your reply, melstan. You've made some pretty judgmental statements, but I have no interest today in trying to prove to you what I know or don't know. If it helps, I do plan on selling only at crafts fairs or farmers markets.

 

[melstan775]

Chicklet, I apologize that my response offended you. I didn't mean to imply that you should answer to me. Of course you don't have to. I am a self-employed person and I was passing on what I know about being self-employed and setting up a company. These were simply points to think about. Your needs for setting up a company will of course be dependent upon your goals, which is why I suggested the business plan. The legal part of business is the least fun but it is necassary. So once again, I'm sorry I offended you. I did not mean to put you on the defensive or make you think that I was saying you had to answer these questions to me. This is just my take in important things to think about is all.

 

[Smee]

http://www.soapmakingforum.com/f23/should-i-start-business-33144/

Chicklet, did you see this post that Lindy "sticky'd" a couple weeks ago?
There's some great info in it if you missed it.

 

[Lindy]

Chicklet have you looked at the HSCMG (formally HSMG) page? www.soapguild.org I think there should be some good information there.

I started out without incorporating my company and instead registered the business as a sole proprietorship knowing that it would have benefits for me on my personal income taxes. The next thing I did was get a business license with the city and then obtain insurance. Next step, join my local Chamber of Commerce and the Soap Guild. Then I was ready to start selling.

This process sounds much more difficult than it really is. In the US (& Canada now too) you can join the soap guild and get your insurance through them with your membership and it is cheap. Do not be misled into thinking your home insurance will insure your small home business. Because of the liability of what we make most home insurance companies won't touch it, at least here in Canada so make sure you talk to your home insurance company openly and honestly about what you are doing to see how it will impact your home insurance. Mine would have cancelled the home policy if I did not get commercial liability insurance.

As for your city license and yes you do need it even if you are only doing markets and festivals, is also pretty easy. Just call your city licensing department, or if you are lucky you can get the info off their website as to costs etc.

All of these things bring a professional image to your business and that is actually important because it lets you future customers know that you take what you do very seriously and care about what you do. It gives you a quiet confidence that people notice and feel confident in.

Absolute best of luck, you are ready and I say go for it!

 

[Hazel]

Woo hoo! Congratulations on this big step! I hope it becomes very successful for you. :grin:

Check out http://www.score.org/. There is a lot of info on this site and they also have free mentoring. Also, call local community colleges in your area. I know some offer free business counseling and seminars for people. They would be able to tell you the steps for starting a business.

The only thing I can tell you for sure is you don't want to be a corporation - sole proprietorship or limited liability company would be your best options. Both of these allow for you to file your federal business taxes on your personal tax return. It's much simpler than corporate taxes. You'd have to check with your state and city to see how these taxes are to be paid.

 

[paillo]

I started out without incorporating my company and instead registered the business as a sole proprietorship knowing that it would have benefits for me on my personal income taxes. The next thing I did was get a business license with the city and then obtain insurance.

This is what I did too. And opened a separate business banking account. It really was very easy. And I agree, if you're planning on adding your biz to your home insurance, being open and honest with them about your home business would be a good idea. God forbid something should happen and you're not covered because you didn't tell them.

All of these things bring a professional image to your business and that is actually important because it lets you future customers know that you take what you do very seriously and care about what you do. It gives you a quiet confidence that people notice and feel confident in.

Absolute best of luck, you are ready and I say go for it!

I'm with Lindy here too. Get these few items in place and go shine!

 

[SoapPapaw]

When I operated a business in Jackson, TN, to operated a business out of my home, I had to apply to the city. Then I was required to knock on the doors of all home within so many feet of my property. And advise the of my intention to have a home business and answers thire questions and provide then of the address of the city planing office so they could write an objection. And then it had to be read in to the next scheduled meeting of city council and if there were no objections the council would approve or deny the request.

Now, here in Conway there is no city license or any other procedures required by local government. It reverts to guidance and requirement of the State Attorney's Office.

You need insurance. Many use the Soapcrafters Guild they charge 400 a year for insurance plus 100 for membership in the US. Others choose a different insurance carriers that have policies for crafters.

My wife sells Hair Bows and other girly accessories at several shows during the year. So we have some knowledge on the subject. Ask if you have other questions.

Also, the group can be very helpful, remember you are working with a diverse international group. What might seen rude to one, may just be the cultural difference that another brings to the whole association. And none of us are perfect. Some times when we read texts we hear tones that were not there when the person typed them.

Example: the following was typed "You need to do this."
Was it "YOU neeeed to do this. (Dummy)" or was it "You need to do this ,(Because I want you succeed)"

I think we all are trying to look out for each others best interests.

 

[Lindy]

Right! Yes separate business account. For the first year I didn't use any of the funds for personal use, not even to pay me, just business expenses. Now that I don't have any other income I do draw some out for me (a very small amount).

I guess I might be a little bit overly enthusiastic about our industry but I would love to see us being seen as a professional organization with all that entails which includes professional courtesy amoungst as when we are truly competition to each other. Although we have a guild I would like to see a professional association for us that are small business and slowly growing it until we can get the benefits that you see with the Chamber of Commerce. Reduced rate personal and health insurance, reduced rate credit cards including fuel cards, etc. Okay there I go off topic again.....

 

[chicklet]

Okay I hope this doesn't post twice - had a computer glitch just as I pushed "post" a while ago. I just wanted to thank you all for the info, the links, and for the words of encouragement. It means a lot!!!

I had read the sticky Lindy had posted and found lots of "have you thought about this" information, but I was at a point where I needed specifics and everything is much clearer now. I agree totally on the homeowners - I had already decided for sure on product liability, but making sure I'm covered on my homeowners policy (or obtaining it someplace else) is very good advice. I've never been one to cut corners there so I'll get that taken care of. I appreciate you sharing your own experiences, how you started out, etc. I was unsure if things that were decided now could be changed later - didn't want to do something now that might mess up something in the future.

Hazel - that score.org site is great! Lots of good info there. Thanks for sharing that. And Lindy, I agree totally about us being seen as a professional organization. The perks would be nice (reduced rate on insurance or credit cards), but more than that, it would elevate this craft to a more professional (and respected!) status.

melstan - no problem. We're good. I appreciate you taking the time to reply and share your knowledge.

I appreciate ALL of you for replying - I feel so much better now! I attended a craft fair Friday night in a city about 60 miles away - they have it once a month for one evening only. There were a LOT of people there. I hope to get all this business stuff done in time to have a booth there in May, for sure by June. I'm so excited!

 

[Amybell]

Don't forget to apply for (and get) your sales tax id number and account with your state. You probably know that, but I didn't see it mentioned, so I thought I'd throw it in there. Sales tax is not something you want to mess with. Set it up, and pay it as they tell you.

Everyone is right...this stuff really isn't hard. It's just a matter of finding out exactly what's required in your area. I've had small businesses in two different states (NY and OH), and both required different things. Regarding LLCs vs. sole proprietorships, if you have a CPA that you work with personally, give him/her a call. They are usually very knowledgeable in these things and the tax benefits/consequences that go with it. Your personal CPA will know your yearly financials and assets well enough to advise you from a tax standpoint. For example, my CPA told me to not even worry about an LLC for my photography studio until I hit at least 30K in gross sales yearly. That was my situation at that time. Yours may be much different.

Best of luck on your venture. I wish you success!

 

[SoapPapaw]

You said, "i attended a craft fair Friday night in a city about 60 miles away - they have it once a month for one evening only. There were a LOT of people there. I hope to get all this business stuff done in time to have a booth there in May, for sure by June. I'm so excited."

Sound like fun. Excited for you.

 

[Mommysoaper]

Good luck, Chicklet! Keep us posted as to how everything goes for you! Sounds so exciting!

 

[soaplink]

It is a wise person who shops! This includes insurance as well. An LLC may not be right for you. Do not be mislead into thinking an LLC exempts you as an individual from any and all liabilty as it does not. Set up an appointment with an agent and learn the ins and outs of what an LLC is really all about. You may find it fits the bill; on the other hand you may find out it does not. Best to you!