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budd4766

To incorporate...or not to incorporate...that is the question

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I know a lot of us are small-timers and just do this for a hobby that occasionally makes a little cash...but some are full-timers and make a living at it. I'm personally starting to sell a few items here and there, and got to wondering about incorporating this hobby into a business.

(This might make a good poll...if someone more knowledgeable than myself could set one up.)

Pertaining to your leather work...

1. How many people here have incorporated their leather business?

2. Is there a real "need" to incorporate?

3. At what point does it become necessary to incorporate?

4. What's the best way to go about it?

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This is my 2 cents worth. The first question that comes to mind (actually there are several):

Do any of your products increase your "personal risk" factor for litagation?

Does your currently tax liability exceed 28-33%?

Do you work from home?

Do you have "bona fide" employess?

Does your state (South Carolina) have a small business tax?

Do you do any business with the US Govt? (DoD, Homeland Security etc)

Are you maxing out all of your current personal investment options (max savings to your IRA's, etc)

If something serious were to happen to you today, what plans or arrangments are made with your heirs?

Is there a "will" or living trust in place to carry your business on? (Would you even care if there wasn't?)

In Michigan the business climate pretty much sucks for anyone that is motivated to try and really create a decent modest sized business (1+ million gross, 10-15 employee's).

As entreprenuers we get this warm fuzzy feeling knowing that we have spawned a "new company." But going from a dba to a full blown company had its price. Paperwork that had to be filed in a timely manner, costs associated with the accounting firm to do the paperwork, dealing with suppliers (they know it is harder to collect from a company than an individual, most of the time).

But, I had to do it because of the exposure of customers coming into the retail facility, insurance reasons etc.

If you are not currently doing a minimum of $75,000 gross, and you are a one horse operation, I would seek the advice of a tax lawyer, spend the $250 for a good consultation and I am willing to bet you do not need to incorporate at this time.

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Hi...Incorporating can open some doors for you, but it also places a number of obligations on you. When I first started our business, a business friend told me something that really proved to be wise. He said we needed three things without fail: A good lawyer, a banker that you trust, and an accountant. He was right. I think the accountant thing is probably the most critical, and the most difficult.

Kevin/springfield leather co

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For small businesses incorporation is not really necessary if your state allows LLC's. The LLC gives you the best of both worlds.

:red_bandana::red_bandana::red_bandana:

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Thanks, guys.

At this point, I don't think it's worth the bother, but in the future, I might do it. Let's wait and see if this business actually goes anywhere first, I guess.

I have a friend who makes throttle bodies for mustang (no, the cars). He did the LLC route, because there's more liability for him if something goes wrong with one. In my case, probably the worst that can happen is somebody drops a cell phone from one of my cases...maybe.

Definitely something to keep in mind though, and when the business gets going well enough to justify the "red tape", I'll look harder at the LLC thingy.

Thanks again!

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