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I need to make my business legal, and I have a lot of questions...

A

aduroris

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Hi everyone,

I've been researching this for quite some time now, but I still have a lot of questions that need to be answered. I don't have a college education regarding owning and operating a business. I've been talking to a lot of different breeders, but I still can't get clarification, nor do I really understand everything that is needed to know. I've also been looking on the IRS website for answers. I guess I should also mention that I need information for New York and Arizona. I live in New York now, but am planning on moving back to Arizona in a few years.

Anyway, the best solution I could come up with is to hire a lawyer that is educated in businesses selling reptiles. I need to know everything from start to finish, how to file my business taxes, understanding receipts; everything... I want to make my business 100% legal, and live by that as long as it exists.

If anyone can help me, please do.

I recently saw an advertisement (on this website) for a lawyer educated in my type of business. If anyone knows who that was, please let me know.

You can contact me through this board (via post or email), or you can visit my website and fill out the contact form with all of the information you have for me.

http://www.diapsid.com/contact.php

Any and all information will be greatly appreciated.

Best regards,
Dustin J. Cox
Diapsid

P.S. I believe the business structure I should be using is a Sole Proprietorship. However, I was told by another business that if I sold a snake that then bit a person, they could sue me personally. I was told that a small corporation (he called it a "s corporation;" I'm assuming s equals small) prevents that from happening. Like I said, I need a lawyer... *sigh*
 
Hey Dustin...didn't realize you had already left!
Your local city/state gov't office has a great small business section...they send out everything you need in a pamphlet, and walk you through it...you don't need a lawyer to set up a small business !
You are also going to need to get your IRS # set up first...feds !!!

Call your local Small Business office...they are great!

greg
 
Um..

Someone please correct me if I'm wrong, but I think whoever told you that you could be sued for a snake biting someone after it is no longer in your ownership is full of hot air. The only POSSIBLE way I can see this scenario is if you sold someone a "guaranteed venomoid" (which is a whole other discussion ENTIRELY) that you guaranteed could never produce venom, and then it DID and bit someone and made them seriously ill or killed them....THEN I can see it. Snake bites can and do happen.....unless you are silly enough to guarantee the new owner it won't bite, I don't see it happening.

As for the other info you are looking for, I agree your local small business agencies, chamber of commerce, etc. are the best starting point.
 
Cat_72 said:
Someone please correct me if I'm wrong, but I think whoever told you that you could be sued for a snake biting someone after it is no longer in your ownership is full of hot air.
Click to expand...

You'd be surprised... although I think what is more likely is for someone to be bitten while choosing an animal at the facility or at a show. Regardless, incorporating is always the better option in a high-risk business... your personal assets are protected in the event of any legal action against the corporation, whether it's a "something bit me" lawsuit or anything else.
 
Never

Never ever own a business under a sole proprietorship, or a partnership. Always form a Corporation, eithern an LLC, or an S-Corp. They are cheap and easy to start, and they protect you personally as long as you follow the rules. All the education you need can be found on the web for free as well. Trust me on this one...form a corporation.

S~
 
I gotta second what Steve said. Operating as an S-corp or a LLC keeps your personal assets and liabilities separate from your company's. In the event a sole proprietorship is sued, the owner's assets are also considered to be fair game. Assuming it plays by the rules, the liabilities of a corp are limited to its assets only, and not that of the officer(s).

Additionally, it helps in terms of obtaining credit in your business' name. Creditors are more apt to offer a line to a corp or a llc than they are to a sole proprietorship. Incorporating, although it doesn't require much effort, sends a message that you're serious about your business and plan to be around long-term.

Building a business credit file isn't especially hard, but it does take some time. Most of us here are off to a good start, as Fed Ex, UPS, and DHL all report to either D&B or Experian. Having credit in your business' name can be worthwhile if it's used responsibly and not intermingled with your own.

Just a word of caution if you eventually want to get a DUNS number. D&B reps can put the worst of the BOI bad guys to shame. Contact me before you apply and I'll let you in on a quick and painless (but most importantly, free)way of getting a DUNS number and establishing a credit file while avoiding their high-pressure push to sell you a completely unnecessary $500 service.
 
Well, a LLC is certainly the best way to go, but the paperwork involved in SUCH an incredible hastle.
A sole proprietership leaves you without your rear covered, but it doesn't have so much interminable record keeping and reporting involved, either.
I think it really depends on what you're doing. I have a few pairs of leos...I'm a small hobby breeder. I may get a business license so I can get Fed Ex certified, but it is really worth it for me to go to the trouble of setting up a LLC?
At least, this year?
$25 has me a business--I can get my Fed Ex account set up, I can buy supplies for wholesale prices, and I'm all set.
Now, if you have thousands of dollars worth of animals, and you're planning to do thousands in sales each year, then a LLC makes sense.
 
Don't do a sole proprietorship!

Cassandra,

If I were to purchase one of your Leos, and my son got Salmonella, and I could prove to a jury that the disease came from the Leo (this isn't hard to do) I could take your business, but also come after your personal bank account, your husbands account (if you have one), your house, your car, your boat, all your stuff could be mine. With a reptile business, you are at MUCH higher risk than if you were selling velcro wallets. If you were selling wallets in your spare time, I would agree with you, but what you sell (reptiles) carries a stigma with alot of people in this country. You have a better chance of losing court battle because of it. Better to be safe and deal with the hassle, than have to deal with the destruction a litigious little pain in the ass person can cause you.

Shawn
 
Wow! I'm amazed with all of the responses. First I must apologize for not responding sooner. I hadn't setup the auto-subscription and I was not receiving any auto-notify emails.

Greg, thanks for the info on the small business stuff. I had already contacted the New York Small Business place and they sent me a packet in the mail. It has a lot of great information. I also looked on the IRS website and they have online classrooms that can help me too.

Mister Internet, Ken, 7x7trev (and others):
Thanks for all the great information. I'm glad I can get some clarity on the corporations. I really need to get started as soon as possible because I should make a nice income with my animals this upcoming season.

What is "DUNS?"

Also, here is a good question. If, in my terms, I state that I cannot be liable for salmonella, bites, etc., can I still be sued? Is getting a lawyer still a good option, or can I find everything I need to start my corporation online?

Once again, thanks for all the info.

Best regards,
Dustin J. Cox
Diapsid
http://www.diapsid.com/
 
If you own a business you will most likely be sued at some point, it's as simple as that. Protect yourself now by going with an LLC or S-corp. If you are sued and lose your business it sucks but its not as bad as loosing your house should your sole proprietorship be sued.
 
A DUNS number is a unique nine-digit number used by Dun & Bradstreet to identify a business for purposes of credit reporting. If you're not going to be seeking credit in your business's name, then not having a DUNS number won't be of any consequence.

In my case, I'm establishing credit in my corporation's name, so it's a must-have for me. My reason for this is that I want to keep my finances separate from the business's.

As for getting sued, disavowing liability in your terms doesn't necessarily shield you from being successfully sued. In today's litigious society, it should be remembered that just about anyone can sue for anything. In regards to a lawsuit actually being successful in a case such as that, it would have to involve some kind of culpable negligence.

When it comes to incorporating, I honestly wouldn't consider paying a lawyer to do it for you. It costs considerably more time and money to have someone else do something so relatively simple. For example, in may case it cost $70 to incorporate. Had I used one of the various online services to do it, my cost would've been ~$300. A lawyer would cost ~$1K to do the same.

If you want to incorporate, I'd strongly recommend spending some time in your local book store or library to study. Books by Nolo Press are a great source of info. There's also a wealth of information online.
 
Ken,
I want to keep my finances separate (personal vs. business). Right now I'm using my personal credit card to make purchases, etc. for the business. I want to get a credit card just for the business, but I need to make it a business first. I'll start reading up on everything as soon as I can.

Thanks guys..

Dustin J. Cox
Diapsid
 
The steps to obtaining business credit are relatively easy, but they can take a few months.

Ideally, you want to obtain credit based solely on the business's profile, although some creditors require a personal guarantee which links you to the credit account.

A great place for you to do some research on establishing business credit is CreditBoards. Be sure to read the pinned threads, especially the "mother thread" as they contain all the basic info.
 
what is involved in changing from a sole owner legal business to a S-Corp or LLC?

I set up as a sole owner to obtain my sellers permit to sell at a few local expos and things are progressing and I would like to switch over. Any thoughts on an easy way to do this cheaply?

I have my Fed Tax ID and State Tax ID and my Sellers permit already
 
MorphTiles said:
what is involved in changing from a sole owner legal business to a S-Corp or LLC?
Click to expand...

Although you can definately do this yourself, it is strongly advised to pay the $300-$800 and have a lawyer take care of everything. As a lawyer told me once, maintaining a corporation takes about fifteen minutes per year...and your lawyer takes care of the necessary yearly paperwork. Incorporating is easy, safe, and adds to business credibility in the eyes of the consumer.

However, you are now on a salary. Gone are the days of pure profit. If you suddenly need an extra $2000 to buy a plasma television...you are out of luck. As a sole proprietor you only have to sell an extra Albino Ball Python. As an employee of a corporation you must save a little at a time per paycheck...or embezzle the money.

Chris
 
Or pay yourself a bonus. There is nothing wrong with paying yourself a bonus if you are the majority shareholder.

S~
 
MorphTiles said:
true but bonuses get taxed at a higher rate
Click to expand...
That is one of the cons of corps. You get taxed twice. First the income is taxed to the corp, then your income (wages) is taxed. As scary as it can seem, I'm still a sole proprieter. I just don't make enough to pay double taxes, and the yearly mandatory minimum corporation fees, especially the fees here in CA. It's understandable why many business' feel CA is very business unfriendly.
 
Yeah I have heard in Cali its nearly impossible for a small business to be a corporation and keep its lights on.

S~
 
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