New Canvas Shop

[thawk]

I've been reading this forum for the last six months. This is my first post. Last Tuesday I quit my permanent full time job to open a canvas shop in East Central FL. I can't get a COD account with any suppliers until I have a Business license. I'm wondering what type of business it will be sole proprietor or LLC or another better option. I understand that an LLC affords some asset protection, but will that mean higher taxes? Any and all help greatly appreciated. We are starting in our home for now.

[Mojo]

I would select an LLC. In Florida you do not pay corporate taxes on any earnings below $ 50 K. I doubt you will hit this mark in the first year or so if your working from your home. I believe that figure was bumped to $ 70 K this year.

The beauty about LLC's is you have the asset/liability protection but your business income/expenses all pass down to your individual taxes on your 1040 thus providing a great tax write off. Theoretically you can write off losses for several years.

I have shown losses on past corporations for 7 years and never had a problem with the IRS. I showed a profit one year and then went back to annual looses again.

I pay for all my materials using a credit card and then pay that balance off at the end of every month. You will eat up some of your margins by using COD services as they charge a fee for every COD order.

You can incorporate by going to the Florida website and following the instructions there. I used the service that is mentioned on their website and they handled all the paperwork for us.

Probably your best bet for a supplier would be Miami Corp. They have a warehouse located in the NE part of Florida and have courier service to your location. This will save you alot of money as shipping is a flat rate $ 10 regardless of weight. MiamiMike is my Florida Rep from Miami Corp and is also a member here and he can help you set up an account. His e-mail address is - mweunski@miamicorp.com

Best of luck with your new venture.

Chris

[byhammerandhand]

On at least a federal level (can't speak to all 50 states), an LLC is a "disregarded entity."    That means it's just treated as shell.  The underlying corporate structure is a corporation, partnership, or sole proprietor, and that's the way you pay your taxes.   So for me, I'm sole prop, everything just flows on to my Schedule C.

One of the things I had to learn starting the business was the order to do things in.

LLC are established at the state level, so there may be some variations.  Here, in Ohio, just send in your 21 or 3 page forms and a check.    You'll also need LLC papers.   I simply went to the library and got the Nolo Press book on LLC.   In the back was a CD-ROM where I downloaded the forms and filled out a few pages, printed it and filed in my desk drawer.   You could also go to a lawyer and pay a few hundred dollars.

As far as a business license, again it varies by state.   In my state, (Ohio), it's simply a "Vendor's License."  $50 every three years.   It notifies the state that you are selling things and you need to file sales tax returns.   I think prior to the LLC I also filed a "fictitious name" form, for a DBA, so I had a business name other than my personal name.  Again, just so some can find "Acme Upholstery" should there be any issues.

You can get a federal EIN (Employer Identification Number) in a few minute phone call with the IRS, once the naming issues above are settled.  You may get your choice of name denied if there is an existing business with a very similar name, for example they'll deny Straight 8 if there is an existing business Straight Eight.  If you have employees or format other than sole prop, you need this.   But it's a good idea because otherwise you'll have to give your SSN to your customers that ask if  you're a sole prop.  No cost on this.

Once you have your business name and EIN, then you can proceed to open a bank account.

Now you're in business.

YMMV

[thawk]

Thanks Mojo. I'm leaning toward an LLC for the reasons you mentioned.
Tommy

[JuneC]

A lurker in from the cold... ;)  Welcome!

You can do whatever you need to online.  Start at www.sunbiz.org and read up.  Lots of good information there as well as the online forms for getting set up. 

While Florida is a real stickler for dotting the I's and crossing the T's, I've found that when you call them, the people who answer the phones are very courteous, friendly and helpful.  Also, when you're starting out, they'll cut you some slack for making an ignorant mistake.  I've had multiple fines removed over the years for my not knowing what I was supposed to do.  Good luck!

June

[Mike]

as mojo said cod fees will add up when you may have 3 deliveries a week .
and open order can add up fast and before you know it you can have a several thousand dollar bill.  llc is what ive been.  I will say get a deposit and use it for the materials, I like mojo pay with my banks debt and don't have any big surprise bills. nice thing with Miami is after your order in made you receive  a email with a copy of your order and a tracking number. you don't have to call "was my order shipped" plus you can place orders online and see whats out of stock

[bobbin]

I'm an LLC.  A good friend (lawyer) set it up for me for free, but as stated above you can do it yourself pretty easily (my brother did).

I use a personal credit card to order and pay for supplies.  I have one that I've dedicated to that sole purpose.  Pay the balance in full every statement!  Do not be shy about asking for a deposit from your customer and make sure it will cover the cost of the supplies for the job in question PLUS the shipping.  It's important that your customer "has skin in the fight", too. 

Never get behind in your book keeping (data entry, for me).  It's easy to want to "put it off" (esp. if the "computer stuff" is hard for you) but playing "catch up" is no fun and why make it harder than it has to be?  Get in the habit of keeping "log" for business mileage you rack up in the course of business.  I frequently go to customers' homes and distant marinas.  I faithfully log the mileage and get receipts for tolls, parking, etc..  My faithful book keeper keeps it all current for me, he helped me set up the system I use, gave me "homework assignments", and does his thing every 2-3 mos..  Best money I spend!  We are a team, and he's the coach. 

[scott_san_diego]

About 12 years ago my accountant set me up as a S Corporation.  Here in California I pay $800 per year for the corporation.
When I first started out I just filed the Schedule C.  When I did this I was able to do my taxes on my own.  Then I started using an accountant for my taxes after I got married.   

[thawk]

I should update. Thanks to all!! You folks rock!! We are an LLC we'll be treated as a partnership I've got accounts with two suppliers, sales tax cert. business license. Working on customers now.  Thanks again for all of the support. It was right on.

Tommy

[Mike]

cool tommy, what I did when I first moved to florida was I walked into every bosa dealer around  and introduced myself and asked if they needed any work. I got a could geet accounts that got me going, having hurricane charley  in town 4 months later didn't hurt either

[Mojo]

Best of luck Tommy. Hope your business grows and does well. Just remember it takes a year or two to
gain momentum so don't get discouraged. :)

Chris

[Mike]

momentum  that's my problem keeping up with it