Business questions

[randy41]

in most states you can form an llc yourself by finding the form on the state's website and filing it out. it costs $100? if you anticipate being sued by someone for a non-personal injury issue then they will have to sue your llc and can get only llc assets.

 

[RNeumann]

It's been a while since I started my business, but I recall the main point of LLC (which can still be a sole proprietorship) is to separate your personal/private assets from the business, as a form of protection. So in other words, if someone sues the business it doesn't put your personal/private assets at risk. I don't think there is any tax benefit one way or another, as nothing I know of depends on whether the business is an LLC or not.

Good points. However it depends on how the OP is doing things. If he has an LLC but trains out of his house and or uses his horse, and someone breaks a leg the individual would seek money from both the LLC and the individual. The protection, in that case, would be limited.

 

[teejk]

Fair points as applied to the OPs situation, I was more replying to the standalone statement you made about their not being a tax difference between the sole prop and LLC.

I did not state I "had" to hire a CPA firm. I chose to do so because I prefer to have experts in their field who can do things better than me do so, to my benefit. I own two companies and half of a third, so I focus my attention and energy on the portions of the business where I am most effective and have the most expertise.

No need to start throwing insults.

Personally I see no down-side to going the LLC route where one's personal assets might be at risk. It affords a legal shield. From a tax perspective it is a "nothing" unless you elect otherwise (i.e. it is not intended to be a tax thing but rather a legal thing) but you do have some flexibility on the tax side ("check the box" rules let you dictate how you want to report the income). Apart from that, somebody mentioned keeping your insurance agent in the loop. In the horse business I would think that your clients are fully aware of "assumed risk" but you might want to browse the internet (or get a lawyer) to see about a disclaimer forms. We live in a law-suit happy country.

 

[Joe Malovich]

don't forget you can expense business related purchases and not pay income tax on the money used to buy those things, like tractors and implements.

 

[sseelhoff]

Hey ya'll

So the wife and I have a "cash business" training horses and giving lessons. As of late, it has grown quite a bit from being a hobby to starting to become a bit of an investment with decent returns. I don't have any actual numbers on me at the moment on the investments vs. returns, but they are enough that we are thinking about starting an LLC in the near future. Just wondering if it is worth it since I plan to keep my full time job as an equipment mechanic (retirement plans, insurance, etc) or if we should slow the side business down some back to the core hobby size. I know without real numbers it may be hard to answer questions about things like if taxes will kill us, etc. I guess just looking for insight on weather our little business is too small for an LLC or not.

Why LLC over a sub s corporation? Sub s income gets taxed at the individual rate.

Whatever you do, if you are going to run a horse business, get a commercial General liability policy.

 

[riptides]

By the looks of the new tax regulations coming it would appear to be in your best interests to incorporate.

 

[dragoneggs]

We set up a business operating out of our house as a side income. I am no tax/business attorney but the advice I received was LLC. It was cheap as we did the legwork to make it happen. No attorney needed. Long term you can grow it and not worry so much about personal liability. Business income/expenses become easier to ledger and separate from your personal. Who knows... maybe you will be looking at part time help, etc. if things go well. Might as well set yourself up for success and mitigate risk. Good luck!

 

[PJ The Kid]

Let me add some information I may have missed.

1. I am not currently training out of my own property, also anyone riding is required to sign a waiver of liability written by the facility owners attorney.
2. Half the reason I am wanting to go into a legitimate business is so that I don't end up nailed in the case of an audit. When we first started, it was on a cash only basis to provide some paper money to keep in the safe and a little "foldin money" in our pockets. It has gotten to the point now that we are getting alot of checks from too many different banks to be driving around cashing them at each individual bank to keep everything off the books, aside from the fact it is nice putting some in our bank accounts and "paying ourselves".
3. I have started charging more and I lost a few prospective clients as far as starting trail horses and such, but it has bumped me into a higher end market (which I wanted to get into anyway) and gotten show people and working horse people coming to me for horse training and lessons.
4. Eventually, when the money/time is right (we all know how that goes) I do plan on moving the operation to my residence. I also plan to expand into some ranch style day work and custom cattle work/catching within the next year.
5. I plan on getting into higher and higher end horses and believe I will need insurance to cover me in the case of a horse injury. IE. horse breaks a leg in the stall etc.
6. In time we do plan on either hiring part time help, or possibly trying to work with some troubled youth. The troubled youth side has always been in the back of both our minds as a "if we won the lottery" type deal as we feel that horses kept us out of alot of trouble growing up and would like to pass that on to more than just our kid/s

Funny thing about the horse world is when you have your prices too low, you don't get the business. To get to the point I want to be at and compete with the other trainers in my type of work, I have to charge prices I consider to be highway robbery.

 

[CobyRupert]

Will you have to pay (or pre-pay) quarterly taxes?

 

[riptides]

Will you have to pay (or pre-pay) quarterly taxes?

Oh heck yes. My accountant is futures aware. Lest I owe more in penalties.