Should I start an LLC?

[jeffesonm]

I've got a 9-5 but have started doing various small things on the side... sell some firewood, split firewood for people, sell some handmade crafts (wood coasters, ceramic pots) at craft fairs, etc. Right now this is all relatively small money, maybe ~$1500/year total.

As I start doing more stuff, I'm wondering if I should form an LLC or some other official type business structure. Interested in a) increasing legitimacy b) limiting possible liability and c) taking advantage of any tax benefits.

Any advice?

 

[mass_burner]

That's not enough to justify the cost/time involved. After factoring your expenses, I'm not even sure you would need to file.

 

[heat seeker]

It might be worth the $ to get a lawyer's opinion. An LLC does not completely protect your assets from liability.

 

[Oday450]

It should be valuable to you. It does help to protect personal assets and you have the ability to separate business and personal accounts. And there are potential tax benefits such as business phone, computer, travel, etc. while not necessary to establish the LLC, a business advisor can be of value to you in maximizing these benefits.

 

[jeffesonm]

Probably 10% interested in limiting liability and 90% interested in the tax part. I don't expect anyone is going to hurt themselves with my little ceramic pot and then sue me, but would be nice if I could get a tax deduction for the kiln.

 

[jb6l6gc]

I know here u just register a business number. As long as your below 30k ish your a self proprieter and don't
Charge or pay any taxes and are a legitimate registered business. Over that you have to start charging an paying taxes you then become a small business.

 

[Dr.Faustus]

I started a business which eventually grew and i decided to start an LLC. Prior to the LLC i was able to keep prices lower, and picked up more jobs as people saw me as the "small local guy" and perceived a price advantage. truth is i made as much with my lower prices but without the cost and overhead - the customer saved money and it didnt affect my bottom line. Post LLC, there is some tax advantage, but not a whole lot and it depends on how much you make. for 1500 a year total i wouldnt do it. your tax guy will charge more to do your company's taxes, and you'll spend a lot more time with documentation of sales, keeping records and filing quarterly taxes.
If you dont know how to do this, it will cost you to have someone do it for you. there is specialized software but that may or may not entail a learning curve for you.
As i also learned quickly, commercial accounts pay a great deal more, however those require you to have proof of insurance. not too expensive in itself, but if you plan on keeping profits at about 1500 a year, it wont pay off. If you think you might want to grow this and leave the 9-5 like I have then it is a must.
I could go on forever but i kinda miss the days when i did this as side work, and life was simple. Get job, quote, do job, get paid, done.
I love repairing, building and installing computers and networks. not filing, billing and clerical.

 

[mass_burner]

I have an LLC, 1 person. It does reduce your effective tax rate. And there are deductions for business, trsvel, home office expenses.

But filing is ~600/year, insurance 1k/yr. That's your revenue right there. If you suddenly grow, you can set it up in one day.

 

[jeffesonm]

Thanks for the feedback all... sounds like I will keep things as-is and consider the LLC later on if any of this stuff takes off.

 

[xman23]

And you can't have a business that looses money for ever. The IRS says that's a hobby, not a business tax expanse or deduction.

 

[jb6l6gc]

yes...but you can have a business that doesnt make money forever LOL.