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In the Shop => General Tormek Questions => Topic started by: Antz on July 02, 2019, 08:01:47 am

Title: Sole proprietor or LLC. ?
Post by: Antz on July 02, 2019, 08:01:47 am
Hello everyone,

What’s better for a mobile sharpening service, sole proprietorship or LLC?

Thanks,
Antz
Title: Re: Sole proprietor or LLC. ?
Post by: jeffs55 on July 02, 2019, 10:42:49 am
We are an LLC because it is our understanding that should you be sued for any reason that the LLC would be sued not you personally. As the name states, Limited Liability Company. So when you sharpen someones knife and they cut their finger off, they cannot take your house. They can only get your Tormek. Further, in the event that you go bankrupt; creditors can only get the assets of the LLC not your personal property. In our state, GA, you list LLC assets on your taxes. Having said all that, I am neither a lawyer or an accountant or a successful businessman. Seek professional advice before you make a decision. FYI we used Legal Zoom and found their fees reasonable and their service easy to use but they are not the only people that do this.
Title: Re: Sole proprietor or LLC. ?
Post by: Ken S on July 02, 2019, 03:17:17 pm
Antz,
Please check your messages.

Like Jeff, I am neither a lawyer or an accountant. Nor do I sharpen professionally. That stated, I think there are more issues for you to consider. Are you covered by your vehicle liability insurance for an accident if the vehicle is used for business purposes? Do you need to obtain a business permit and/or collect sales taxes?Do you have the income tax expertise to handle the extra paperwork?

State and local laws differ. You need local knowledge. I do not mean to discourage you.

Ken
Title: Re: Sole proprietor or LLC. ?
Post by: john.jcb on July 02, 2019, 04:07:15 pm
Here is a page that gives an overview of the necessary steps and more detail if you need it

https://www.sba.gov/business-guide/10-steps-start-your-business/
Title: Re: Sole proprietor or LLC. ?
Post by: jeffs55 on July 02, 2019, 04:26:13 pm
That stated, I think there are more issues for you to consider. Are you covered by your vehicle liability insurance for an accident if the vehicle is used for business purposes? Do you need to obtain a business permit and/or collect sales taxes?Do you have the income tax expertise to handle the extra paperwork?

State and local laws differ. You need local knowledge. I do not mean to discourage you.

Ken
Like he said, we had to get city approval for a home run business, a business license, a sales tax number, file with the state for having a business and probably some things I forgot. Plus there are annual LLC fees and business license renewals etc. Income taxes with initial investment, income and/or losses, depreciation, vehicle mileage etc. Oh yeah, don't think that you can "write off" a bunch of stuff like a new vehicle for instance and depreciate it and whatever over time. You do have to have enough income to depreciate from. You can't take a $10k vehicle depreciation on a $5k income and if you do not make money within a certain period of time you do not have a business, you have an expensive hobby. No write offs on your expensive hobby.  This is not easy.
Title: Re: Sole proprietor or LLC. ?
Post by: Ken S on July 02, 2019, 06:28:54 pm
Antz,

Don't let this conversation intimidate you. People start small businesses, including sharpening businesses, all the time. what you need is good information. We are most fortunate to have the packet that Steve Bottorff has put together as an excellent starting point. Here is a link:

https://sharpeningmadeeasy.com/

Before retiring, Steve ran a successful sharpening business for many years, which included one on one teaching people like you who were starting sharpening businesses. If, by chance, you have not yet purchased his Sharpening School package, it should be your top priority. I read through the business part of Steve's package. I was impressed. It will give you a frame of reference for further investigation.

One of the many things I like about this forum is that we are helpful with no sense of being competitive. Jeff can help you with absolutely no worries about you spiriting away any of his customers from Georgia to Hawaii. We can all benefit.

Do not become discouraged.

Ken
Title: Re: Sole proprietor or LLC. ?
Post by: jeffs55 on July 02, 2019, 07:54:03 pm
Not the same kind of business, I/we are in yard greetings.
Title: Re: Sole proprietor or LLC. ?
Post by: Ken S on July 02, 2019, 09:47:18 pm
Antz, I think it's only fair for you to promise not to steal any of Jeff's yard greetings customers in Georgia.   ;)

Ken
Title: Re: Sole proprietor or LLC. ?
Post by: Antz on July 03, 2019, 12:13:32 am
Fair enough, I promise to not steal any customers from Georgia  ;D . Thank you all for the advice, as I understand it the LLC would give me more personal protection from liability issues. The filing is easy her on our Hawaii gov website but there is a lot more to think about as you guys mentioned. Sales tax, depreciation, filing losses, liability, etc. I will probably end up consulting with a local business lawyer to iron out all the fine details and the best way to go about things.

I also enjoy this forum where we can all help each other without a competitive nature. I very much appreciate all of your input.

Thank you,
Antz
Title: Re: Sole proprietor or LLC. ?
Post by: john.jcb on July 03, 2019, 12:14:26 am
I had a small business making wheel thrown pottery and I did it as a sideline to my full time  job. Doing all the paperwork and record keeping was a pain for even my small operation. The good part was that it turned out to be profitable. I was able to convert a hobby into a money making operation that paid for itself and my other hobbies. When we relocated I did not start it up again but switched over to teaching evenings. A lot less paperwork as an independent contractor. Most of the effort is up front and once you are going it becomes more routine every month.

Good luck
Title: Re: Sole proprietor or LLC. ?
Post by: Ken S on July 03, 2019, 03:38:49 am
Years ago, my wife, who worked as a bookkeeper and accountant, helped me redo my photographic business schedule C. What really stood out was her mileage log for business driving. I recommend it for you. Each entry includes the date; starting/ ending mileage; location; and purpose. When my wife got through with my schedule C, I had no fear of the IRS! She helped keep everything organized.

Ken
Title: Re: Sole proprietor or LLC. ?
Post by: RickKrung on July 03, 2019, 06:43:39 am
You have received a lot of good advice and information.  You may not want to try to learn everything about starting an LLC by talking with a lawyer or accountant - if for no other reasons than the cost and the time it would take to sit there and listen. Also, I don't absorb information well that way.  I need to be able to go back to my sources/resource frequently. 

Here is a book (https://store.nolo.com/products/form-your-own-limited-liability-company-liab.html) I found very helpful.  I have not formed an LLC yet, but when I do, I will consult the experts, having already armed myself with information from this book and then I'll refer back to the book as needed. 

Good luck and keep us posted. 

Rick