[Moesislak]

Hey guys, I've just got a few shirts I'd like to sell just to see if my design idea is something people will buy. I have 8 shirts I want to sell on bonanzle, do I have to create any kind of company?

 

[skanman]

You can operate under a sole proprietorship but it's not recommended as you are held personally accountable for any screw ups you may make, I.E. printing something you think is original and some one else thought it up first and copyrighting it resulting in law suit.. that would suck. LLC is cheap and effective to start, lots of law companies will do it cheap for like $130 bucks for everything.

 

[mudturtle]

I was struggling with the same thing. Like it was said if your protected under some sort of company or LLC you are the one in hot water if something happens. I filed for my S-Corp last week, just printed the form from online and filled it out in 5 minutes and mailed it in to the state of Ohio with a check for $125. Its so simple that its a no brainer.
Plus, if your stuff starts selling quickly then your already set up and ready to go.

 

[cleos]

What you should know is that there are some requirements to S-corp, C-Corp, LLC, etc... you must be ready to report your activity in a timely manner. You will then need a CPA unless you are proficient in that subject but I guess you have better to do. Fines for not filing on time can be expensive. (at least in California!)

Another thing, unless you pay cash, some suppliers requires to secure the debt when giving payments. Your LLC won't protect you from that since most of the time you guarantee the payment with your personal name.

If you need an SBA, a credit line, a lease, the lender will ask for a collateral. Unless you have enough assets in your business, you'll have to provide them from your personal estate.

Taxes: they won't disappear in case you go broke.
Wages to employees: they won't disappear in case you go broke.
Bounced checks: it's a crime no matter what and YOU are responsible.

Good to know, in the court of California and if you need to appeal, you can't represent yourself if you are a corporation. Get ready to spend big bucks to defend yourself!

If you go into a partnership with a corp, LLC, etc, make sure you amend your agreement with that partner to the articles. Be specific as much as you can. If something goes wrong, you'll thank me later!

So overall, if you have a lot of personal assets that you need to protect them, think outside the box and setup a trust. Unless your business is invoicing a lot, I mean a LOT, or you go into big business with the big boys, a corp is not justified.

So if you are starting, get you seller's permit, your biz license and your DBA, start to make money and watch out for what you do.

Good Luck!

 

[JAF]

I would agree with Gerald. I've been a sole-proprietor for 13yrs. I've asked 3 different accountants over the years and they all tell me not to change. I file taxes jointly with my husband and it has been working out OK.
Something that someone said years ago..."what are they going to sue you for...a crooked logo?" There isn't alot of risk in my business, I obay the law & pay my taxes. Unless my business structure changes I'm staying with what works.

 

[twistededge]

Talk to your accountant about tax implications on the LLC or S-Corp.

You can get a EIN number from the IRS for your sole proprietorship so you don't need to use your SSN for the W9's and 1099's that will need to be written next year for all purchases over $600.

 

[binki]

Hey guys, I've just got a few shirts I'd like to sell just to see if my design idea is something people will buy. I have 8 shirts I want to sell on bonanzle, do I have to create any kind of company?

For every question there is a simple answer that is completely wrong. With what information you have supplied here is my simple answer

First off, you can start out as a hobby and not have to do anything. So in that case you do not need a business.

If you do start making serious bank then talking to a CPA or other tax professional would be a benefit BEFORE you do anything else. This is really important because where you are located can affect how you form your company.

When you do form a company there will be many costs involved. Every government agency will take a bite of your apple. City, County, State, Federal as well as various boards and agencies. You will be bombarded by scams looking like government agencies as well.

When you do decide, seriously consider a C-Corp. It offers the most benefits of any structure. It has its own costs but from our perspective after having a DBA, LLC and C-Corp, we find the C-Corp to be the best entity for us. Your mileage may vary.

Check out www.taxguru.org for more information.