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Starting A Small Business

Discussion in 'Off Topic' started by Dyjital, Aug 5, 2015.

  1. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    I'm in the planning process of mulling around the idea of starting a small business.

    Start small from home, if it expands then grow with it.

    So this has lead me to some questions.

    LLC? Sole Proprietor? Run it directly under my Tax ID?

    Pros and cons for LLC? Same with SP or individual?


    Easiest way to setup these? I plan to register the business name, then check go the license route with the city/county then after that's setup start my small time operation.

    Business will be in receiving ordered firearms (FFL) for friends and their friends... to cut the pricing if anyone orders something online and drop the outrageous transfer fees.
     
    Last edited: Aug 5, 2015
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  2. IronMonster

    IronMonster Washington Opinionated Member Diamond Supporter

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    Unless you really treat it as a corporation an LLC will not give you any protection. You have to never buy anything personal with company funds or it's obvious it's a "sham" corp. (I learned all this after becoming an LLC myself, in hind sight I could of and probably should of stayed a sole proprietor)
     
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  3. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    Thanks @IronMonster, looks like a sole proprietorship is what I should do and create a DBA name and use that as the business name vs "Harry Back and Neck".

    Since it's going to be small and grow small (hopefully grow).... the integrated taxes as an individual will be nice to have to simplify.
     
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  4. 156256Hunter

    156256Hunter Fairview-ish Active Member

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    Below is an excerpt from an article I found on an Portland law firm's website (Dunn Carney Allen Higgins & Tongue -- I'm not affiliated with them in any way). I may be starting my own business soon, and forming a single member LLC will be better than a sole proprietorship for me. Yes, it's a process to incorporate/file the paperwork, annually renew, make initial contribution, register with local governments if your income exceeds a certain dollar amount, etc., but I really like the aspect of limiting certain types of liability. (Of course, if an LLC were to take out a loan or line of credit, or lease commercial space, then the bank or landlord probably get a personal guarantee, not just a signature by the LLC.)


    ==============================
    How to Avoid “Piercing the Corporate Veil”

    APRIL 2006

    One of the main reasons to form a corporation or limited liability company (“LLC”) is to shield personal assets from claims against the business. Ordinarily, such claims can only be enforced against assets of the business. An owner’s personal liability thus is limited to his or her equity in the company, while personal assets, such as a residence, bank accounts or investments, are shielded from creditors.

    Under certain circumstances, however, business creditors may penetrate this shield and go after the owner’s personal assets. This is known as “piercing the corporate veil.” Most veil piercing situations arise from a failure to observe legal requirements for maintaining the business, or a failure to clearly separate corporate and personal assets. This article offers some guidelines for setting up and running your business to maximize your personal liability protection.
    ....

    LLC Guidelines

    LLCs have fewer formal ongoing requirements than corporations; however, LLCs ordinarily should take many of the same precautions to avoid personal liability for business owners. Common sense guidelines include:

    • Holding an organizational meeting: After the LLC is formed, the members or managers should meet to adopt an operating agreement and to issue membership interest to members.

    • Adopting an operating agreement: Like a corporation’s bylaws, an LLC’s operating agreement governs how the business will be operated.

    • Documenting LLC activity: LLCs should document any changes in membership interests and should maintain records of all major business decisions of the LLC, including real estate transactions, contracts, and leases.

    • Documenting LLC finances: LLCs should maintain the same financial information outlined above for corporations.

    • Holding annual meetings: An LLC should hold annual meetings of its members and document business conducted at those meetings

    While no one of these items on its own may be enough to pierce the corporate veil, multiple items could lead to such an outcome. Limiting your personal liability is one of the most important attributes of a corporation or LLC.
     
  5. solv3nt

    solv3nt Portland Well-Known Member

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    Just make sure to keep your personal and company money separate, this will keep you from creditors coming after you personally if something goes wrong.
     
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  6. jbett98

    jbett98 NW Oregon Bronze Supporter Bronze Supporter

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    Find a good & successful tax adviser who specializes in small businesses. Follow their advice.
    Keep good records and in an organized manner. Back up all computer records with paper copies.
    I've been self employed pretty much my whole working career and loved it.
    My favorite saying is "Promise less, and deliver more." and if you follow that, you will have success in whatever you choose to do.
     
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  7. 308

    308 ΜOΛΩΝ ΛΑΒΕ ΜOΛΩΝ ΛΑΒΕ Platinum Supporter Silver Supporter

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    Legal Zoom is a painless way to form an LLC
     
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  8. bolus

    bolus Portland Gold Supporter Gold Supporter 2015 Volunteer 2016 Volunteer

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  9. mjbskwim

    mjbskwim Salmon,Idaho Well-Known Member

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    I knew someone that was making almost 20k a year doing transfers.
    Now that was during the Sandy hook time and they couldn't keep stuff on the shelves so customers were having better luck finding the guns they wanted.It can take a ton of time looking for a specific gun
    Heck with the political BS that's coming (elections) this may be a great time to start. Then with the profits start buying all the guns you can get hold of.
    I thought of doing this my self,then try the NFA stuff. But here those types may not pay for the 500 bucks a year it takes to keep the permit
    Anyway,good luck
     
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  10. AMT

    AMT Vancouver, WA. Gold Supporter Gold Supporter

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    Personally, protect everything you can, as best as you can.

    I thought of starting a small too.

    LLC will help keep your personal stuff [fairly] protected in case of lawsuit. "I ordered the gun and had it delivered to Dyjital. When I went to pick it up I was never instructed of the safe use of the item. I want to sue them because I shot my neighbor for sleeping with my chickens."

    Laugh! You know no one now a day takes responsibility for their actions. Any attorney will look to put the blame on someone other than their client. And go for the deepest pockets and highest insurance payout.

    LLC just might keep you from losing your home, rights, account(s), etc.

    Also, not only NOT use company $$$ for personal gain, but keep everything in a separate safe too. Don't "receive" a firearm and put it in your personal safe (with your personal items). But you probably knew that too. ;)

    I looked into Legal Zoom. For less than $400 they do all the paperwork and filing - with the State and Feds.

    Good luck!
     
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  11. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    Thanks Gents!

    @AMT, I did read that you can actually store everything in the same safe IF you tag personal items "Personal Not For Sale", along with any heirlooms mounted to walls. Just easier to have one safe for each (personal & business)

    @mjbskwim yeah I figure if the initial is $200, then every three years it's around $100- it will be worth while.

    I happen to be very very good with keeping track of everything. Years ago I worked for a steel construction business and would keep inventory of hundreds of man hours per week, itemizing each by the job they were doing, then submitting billing for each man, billing per equipment per hour of the day/week/month. Worst experience I ever had was in a $400,000+ bill I was off $.43. That was a bugger tracking down that mistake. Turns out I transposed two numbers a $.53 when it should have been $.35, and a $.43 when it was supposed to be $.34. Never forgot that. Made sure to always double and triple check afterwards.

    I have made Excel my B!tch when it comes to organization.

    Thanks again for the information.
     
  12. Swedish K

    Swedish K SW Washington Moderator Staff Member

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    Dyj -
    FWIW you might want to go 07 (manufacturer) route incase you choose to "build" guns - remember ATF considers buying a complete lower and a complete upper and putting them together to be "manufacturing". Also - if you want to add anyone to your FFL put them on as a responsible party, not a partner or part owner - this can come into play for disposition of NFA items (if you get your SOT) should you ever dissolve the business. This isn't currently as big a deal in OR as other states but the way things are going...
    We learned the hard way...
     
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  13. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    Last edited: Aug 6, 2015
  14. AMT

    AMT Vancouver, WA. Gold Supporter Gold Supporter

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    @AMT, I did read that you can actually store everything in the same safe IF you tag personal items "Personal Not For Sale", along with any heirlooms mounted to walls. Just easier to have one safe for each (personal & business)



    I had never heard this. Thank you for passing along.
     
  15. JRuby

    JRuby St. Helens Oregon Well-Known Member

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    Please be very careful of the SBA if you are considering them. Treat them like a double edged sword. Good and bad.
     
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  16. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    The grey area:
    +++++++++++++++++++++++
    A presumption exists that all firearms on a business premises are for sale and accordingly must be entered in the records required to be maintained under the law and regulations. However, it is recognized that some dealers may have personal firearms on their business premises for purposes of display or decoration, but not for sale. We recommend that firearms dealers who have such personal firearms on licensed premises do not mix such firearms with those held for sale. In addition, it is recommended that such firearms be segregated from firearms held for sale and appropriately identified (for example, by attaching a tag) as being “not for sale.” Personal firearms on the licensed premises acquired prior to licensing which (1) are segregated from firearms held for sale and (2) are appropriately identified as not, for sale need not be entered in the dealer’s records.

    From:
    https://www.atf.gov/file/56456/download

    Still best to keep separate.... but in a pinch or when just starting and maybe lacking the full funds for dual safes that could work. In a pinch as a temp solution.
     
  17. Ben Beckerich

    Ben Beckerich NW Oregon Bronze Supporter Bronze Supporter

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    Here's my possibly-useful-maybe-not advice.... I havne't read the whole thread, as I have a migraine and am behind schedule with work. Could be some of this has already been touched on.

    Do you have any expensive licensing requirements for your business? This is where the whole entity thing gets tangly. You can change your entity any time you want, just by forming a new one... but if you have licensing requirements from other agencies, they'll likely make you re-license when you do. So something that would otherwise only be a single form and $90 can turn into new CE, hundreds in licensing fees, etc. Point being: if you don't have any big licensing requirements, you can run it as a SP until you decide you think you need to be an LLC or Corp, and no big deal to change later. But if you do, you need to make that decision now... and a Corp has very few operational disadvantages, aside from the extra time and cost.

    Doing a corporation or LLC doesn't necessarily protect your personal credit, because nobody will give your LLC or corporation any credit without a personal guarantee. That means personally putting yourself up, and your credit record, as collateral against the debt. Otherwise, what's to stop people from running up a bunch of debt on their corporate company and then bailing on the debt? So until your business has "credit" of it's own, and that take a while, you're gonna have to run any credit through your own name. That's risk.

    If you do corporation, make sure you get your S-corp status from the IRS. Seems some people think they're automatically being taxed as S corps because they filed as an S-corp with the secretary of state... but the IRS doesn't give a crap what you call yourself, you're a regular old taxable C corp until you're an S corp with them.
     
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  18. Dyjital

    Dyjital Albany, Ore Flavorite Member Bronze Supporter

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    None that really matter. That's the simple answer. Simple model, simple setup. Not wanting to build a mansion then try to fund it.