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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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 Posted: Apr 05 2007 Post subject: I am NOW offical.... |
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My company name is now "Marv's Marvlus Pit Bar-B-Q Inc." I received my papers in the mail today.. 
Still have to sign the 'offical' forms but as of today I am incoperated.
Tomorrow I go to get my new business account at my bank.
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BBQMAN
BBQ Super All Star
Joined: 13 Jun 2005
Posts: 15475
Location: Florida
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| Posted: Apr 05 2007 Post subject: |
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Awesome Marv!
Now that you are "incoperated", do you get a discount at the donut shop, and your parking tickets waved?! 
Just kiddin of course!  Should be getting my own papers in the mail next week or so.........................
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BBQMAN
"I Turned A Hobby Into A Business".
Providing "IMHO" Since 2005. |
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chef_hog
BBQ Fan
Joined: 07 Sep 2006
Posts: 263
Location: Middletown, DE
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| Posted: Apr 05 2007 Post subject: |
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| That great Marv I have my company done as an LLC which help to protect my personal assets. Again Congrats |
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BBQMAN
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Joined: 13 Jun 2005
Posts: 15475
Location: Florida
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| Posted: Apr 05 2007 Post subject: |
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Hi there Chef Hog!
Filing as a S Corp. has some tax advantages. I don't mind paying Uncle sam a fair amount, but don't like paying extra because I'm self-employeed. Consult your tax advisor!
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BBQMAN
"I Turned A Hobby Into A Business".
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marvsbbq
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Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 06 2007 Post subject: |
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| BBQMAN wrote: | Awesome Marv!
Now that you are "incoperated", do you get a discount at the donut shop, and your parking tickets waved?!
Just kiddin of course! Should be getting my own papers in the mail next week or so......................... |
DANG....caught again... And no, no discount....even swap for BBQ... Tickets however different story.  Man, been so long since I even had a parking ticket...knock on wood. 
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CarolinaQ
BBQ Fan
Joined: 21 Sep 2006
Posts: 268
Location: WNC
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| Posted: Apr 06 2007 Post subject: I am NOW offical: |
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Marv, Mike and others,
My accountant and I discussed this several weeks ago and we have an appointment in two and a half weeks to sit down and discuss going Inc or LLC. From my research on the subject I know there are advantages and disadvantages to both. Would you guys care to share why you set your business up the way you did and what was or were the deciding factors? |
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BigOrson
BBQ Super Pro
Joined: 02 Dec 2006
Posts: 2857
Location: Marietta, GA
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| Posted: Apr 06 2007 Post subject: |
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I'm still new to the business, but I'll share what I've learned. LLC will give you limited protections from your personal assets. Subchapter "S" will give you better tax advantages without further personal liabilities.
If you really want to protect yourself from liability, you should look into incorporating in Nevada. Their laws protect you the most from personal liability in owning a corporation.
I'm Subchapter 'S' in Georgia at the moment, but am contemplating moving that corp to Nevada.
FWIW...I'm in the salsa and BBQ sauce business, not a BBQ operation. |
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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 06 2007 Post subject: |
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Mainly both my accountant and attorney advised me to go S-Corp saying I would have better tax advantages. Although you DO have to keep better records that with LLC.
But for the difference from $450 (LLC)-$750 (S-Corp)...I figured, what the hell.. 
But the REAL reason I did it was....My account told me "You are too damn old to start over".. What she meant by this is...IF I ever had an auto accident or was sued due to sickness from a catered event or other business related incident.
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BBQMAN
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Joined: 13 Jun 2005
Posts: 15475
Location: Florida
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| Posted: Apr 06 2007 Post subject: |
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Ditto Marv!
S Corp. are the way to go. An LLC is just that- Limited Liability Corp. If you are looking for protection both from taxes and liability, go with the S Corp.
Of course it's always a good idea to check with your own tax proffesional!
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BBQMAN
"I Turned A Hobby Into A Business".
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marvsbbq
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Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 06 2007 Post subject: |
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If you REALLY want to know about becoming INC. Go on line, there is TONS of info on this.
I just typed in *advantage of incorporating* and come up with a 'boat load' of information..
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OddThomas
BBQ Super Pro
Joined: 07 Mar 2007
Posts: 2010
Location: North Carolina
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| Posted: Apr 06 2007 Post subject: |
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Howdy,
| BBQMAN wrote: | | Of course it's always a good idea to check with your own tax proffesional! |
I agree completely. The first thing I urge folks to do is to consult with an attorney and a tax consultant before making any decisions. The decision of which type of company to form is largely based on your income potential and the level of liability protection you require. There is also the consideration of "upgrading" from one form of company to the next as your needs dictate.
If you're interested in know a bit more, read on:
| BBQMAN wrote: | | An LLC is just that- Limited Liability Corp. If you are looking for protection both from taxes and liability, go with the S Corp. |
Just for clarification purposes (and NOT to step on anyone's toes:) ), an LLC is not (technically) a "corporation", which is why the paperwork and ownership regulations are much more relaxed than in an S or C corporation. LLC stands for Limited Liability Company.
Further, the "limited" part of Limited Liability Company does not infer an LLC provides less protection than a standard corporation. Owners of a LLC are protected from liability for acts and debts of the company much the same as shareholders of a S corporation. This protection limits a member's personal financial liability to a fixed sum--hence the term "Limited Liability".
I should also note that neither a LLC, S, or C corporation provide complete liability protection. There is always more than one way to skin a cat.
| BBQMAN wrote: | | S Corp. are the way to go. |
S corporations
S corporations can offer generous relief from “self-employment tax”, if you're making a crap-load more money than your position would 'normally" pay--e.g. a "fair salary".
For example if you run a BBQ catering service and are hauling in $500,000.00 per year, but only directly pay yourself a "managing salary" of, say, $90,000.00 per year, you will save about $63,000.00 per year in self-employment taxes. That is one hell of a lot of money and well worth the red tape involved with a S corporation. You can then allocate the remaining $410,000 to yourself through "distributions", which are not subject to self-employment tax.
If, however, you only bring in $100,000.00 per year and pay yourself the same $90,000.00 per year salary, your tax savings will only be about $1,530.00. For some, that savings just isn't worth all the extra effort, paperwork, and accountant fees associated with a S corporation. If you're paying yourself the entire $100,000 per year, you're not saving a penny.
And don't go thinking, well heck I'll pay myself $1.00 a year and save a bundle. The IRS closely watches S corporations to make sure that salaries being paid are indeed "fair". For example a manager will be expected to earn a manager's salary; not a waiter's salary. Your accountant can further clue you in on that aspect of things.
Limited Liability Companies
LLC's don't require a board of directors, shareholder meetings, and other managerial formalities. They are easier to operate and require a lot less paperwork. For small businesses, the importance of "ease of operation" cannot be understated.
LLC's offer greater flexibility in ownership and distribution of profits. For example, in an S corporation where Bob has invested $80 and Tom has invested $20, the profits must be split 80/20%; no exceptions. In an LLC you can draft an "operations agreement" that allows you to distribute profits the way you want. For example if Bob only invested money but doesn't do any of the work, he may only get 20% of the profit while Tom, who's smoking up the BBQ every, day gets 80%.
One also little mentioned fact is LLC's can elect to be taxed as a S corporation. Technically you you can set up a single member limited liability company, elect to have the LLC taxed as if it were a Subchapter S corporation, and save yourself a lot of red tape while receiving the tax relief of a S corporation.
All of these points are worth considering and reviewing with to your attorney and accountant about before making your decision. I've gone through 5 different startups and have experienced just about everything form a partnership to a C corporation and I still get confused.
Best regards,
Mike W. |
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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 06 2007 Post subject: |
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WOW Mike, Where in the world did we find you  We should say, this forum is a 'starting point' for information for folks to go off and do their own thing. We should also say: By all means consult their own legal advisors.
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corndog
BBQ Super Pro
Joined: 02 Dec 2006
Posts: 1209
Location: Zebulon, NC
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| Posted: Apr 07 2007 Post subject: |
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You da' man, Mike  I like the fact that people are learning there is more to this than just throwing meat on the smoker and plating it up!! Most anyone can do that which is why I am liking the slow start our company is using...we want to learn "the back of the house" and how the business side works. There has been alot of great info shared here about this in the past month or so. So, my hat is off to all those who participate, not only by answering the questions, but by asking the questions...
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Kevin "Corndog" Cameron
Dang it boy, that's some mighty fine eatin'!!!! |
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Frosty
BBQ Pro
Joined: 21 Oct 2006
Posts: 783
Location: Allegheny National Forest-PA
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| Posted: Apr 07 2007 Post subject: what about.. |
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the 'small potatoes' guy who dabbles in catering/que on weekends ?
What if a guy grosses say 5K/ year?
"Inc." seems like a lot of paperwork-red tape-Bs for a hobbyist who wants to be 'legit'...
A friend of mine incorporated last fall ( self employed gas well tender), I see him on Tuesdays & all he's done since is bitch about 40% of his income goes to taxes each month...
Thoughts? |
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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 07 2007 Post subject: Re: what about.. |
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| FrostyChalet wrote: | the 'small potatoes' guy who dabbles in catering/que on weekends ?
What if a guy grosses say 5K/ year?
"Inc." seems like a lot of paperwork-red tape-Bs for a hobbyist who wants to be 'legit'...
A friend of mine incorporated last fall ( self employed gas well tender), I see him on Tuesdays & all he's done since is bitch about 40% of his income goes to taxes each month...
Thoughts? |
My "THOUGHT" is talk to your own attorney about your pretictular business plans and needs. What works for one my not work for another.
DON'T take what is said here as ALL the information needed to make your decision(s). We are only 'food for thought' so to speak.
Most attorneys will give you a 30-60 min FREE consultation. If nothing else, you might have to pay $100 for that hour but you can get a MOST of your questions answered in that hour....Well worth the $$$ spent.
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Frosty
BBQ Pro
Joined: 21 Oct 2006
Posts: 783
Location: Allegheny National Forest-PA
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| Posted: Apr 07 2007 Post subject: |
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My attorney told me that a "sickness" case by a single person is really pretty hard to prove. He even said that in a 'slip & fall' ( most common)case...anything less than a broken neck... is pretty much covered by insurance...
Basically, you really need to put some effort into screwing up bad enough to lose your house
............
BTW you're right about the fee..I was in his office for about 45 minutes...I never got a bill. On the other hand...about 12 years ago ,he closed on a real estate deal...after all was said & done...I got another bill for $5 !!!!
I didn't pay it...then I saw him on the street about 2 years later & handed him a 5...He thought I was nuts |
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OddThomas
BBQ Super Pro
Joined: 07 Mar 2007
Posts: 2010
Location: North Carolina
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| Posted: Apr 07 2007 Post subject: Re: what about.. |
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| FrostyChalet wrote: | | "Inc." seems like a lot of paperwork-red tape-Bs for a hobbyist who wants to be 'legit'... |
Sometimes it is and you don't have to structure any more than as a basic sole proprietorship. Some folks don't even go that far; they work as "consultants" or "contract labor", to avoid 99% of the issue.
In the world of food service though, a couple of things should give you pause when considering your options:
1: The very real possibility you could loose everything you own
2: The aftermath of number 1
I'm not just kidding around either; this sort of thing happens more often than you'd think. Marv even pointed out earlier that his accountant advised that he was "too old to start over". That's really good advice for anyone.
Just imagine that somehow you get ahold of some bad meat, only you don't know it's bad, so you serve it up. All of the sudden somebody falls out dead on you. Holy butts Batman!!! What do you do? What... dooo you do?
If you have good insurance and have properly structured your company to limit your personal liability, hopefully you'll be able to continue living in your home and driving your car--you may even be able to continue operating your company. If not, you might face a wrongful death suit that could destroy your business and consume your personal assets; it can get really ugly.
This example is, of course, an extreme case. Hopefully you'll never kill a client with your BBQ; however, at some point you have to weigh the possibilities and make some decisions on how to best protect yourself.
If you want the path of least resistance and least red-tape, talk to your attorney and accountant about forming LLC and perhaps electing to pay taxes as a Subchapter S corporation.
| FrostyChalet wrote: | | A friend of mine incorporated last fall ( self employed gas well tender), I see him on Tuesdays & all he's done since is bitch about 40% of his income goes to taxes each month... |
Self-employment tax is a social security and Medicare tax for folks who work for themselves. That's a whole different thread, but the idea is that you are providing for your future. If you work a regular job, you already pay a similar tax, so the transition shouldn't be a shock. If you've been working "under the table", it can sting a bit.
The semi-good news is you only have to pay it up to a certain level of income; $94,200. After that, you're off the hook for the year. Self-employment is also tax deductible; you can deduct half the total amount from your adjusted gross income. Assuming you paid the whole wad ($14,412.60!), you get an instant $7206.30 deduction. At least there is some comfort in that, but only some. 
Best regards,
Mike W. |
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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 07 2007 Post subject: |
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I NEARLY had a 'situation' once where this lady (groom's mother at a groom's dinner) went into anaphylactic shock and wound up in the hospital for 3 days. (missing her son's wedding).
Come to find out, she was alergic to WHEAT and never told US. Luckily we were able to prove that we did not have ANYTHING with wheat or wheat gluclose in it.
As it turned out, she ate a dessert roll before even coming to the dinner and that was what caused her problem........Needless to say.........SCARED THE BEJEEVERS OUT OF ME!!!
Sounds like a DAMN GOOD reason to be INC. to me 
I am sure there are TONS of stories simlar to this one from the food service industry.
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Frosty
BBQ Pro
Joined: 21 Oct 2006
Posts: 783
Location: Allegheny National Forest-PA
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| Posted: Apr 07 2007 Post subject: |
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GOOD INFO coming here..keep going !
Ya gotta wonder why some people KNOW they are allergic to certain things,yet they don't watch what they eat.
I gotta wonder if you would have lost that case..I see no negligence on your part.
I was at the bowling center one day..the senior league had a B-day party for an old fart...Another old fart ate TWO large pieces of cake KNOWING he was diabetic. About 30 min. later..he keeled over. We had to call 911 & get him dragged out.
It seems people should be held responsible for thier own actions |
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marvsbbq
BBQ All Star
Joined: 15 May 2005
Posts: 6186
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| Posted: Apr 07 2007 Post subject: |
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I agree 100% but IF you are sued, you have to spend $$$ to protect yourself...NEVER know which way the jury is going to vote...unless at least ONE of their meals is some GOOD barbecue..
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