Small business start up advice
 

Looking for advice on small business start up. Mainly interested on the pro's and con's of forming a sole proprietor vs LLC? Concerning taxes , insurance , liability , etc . I would be selling fresh produce, just myself working , would be a gross income of 2-10k , doing retail sales to restaurants , at farmers markets and via farm to restaurant delivery service.

Thanks

don,t do it /more a PITA than its ever worth ;;;;;;;;;;;

The LLC is meant to limit tax and personal liability. I don't think there is much inherent liability in the wholesale produce business.

In this economy, I'd limit my start-up costs and start the business as a sole proprietorship. If it works and your business becomes profitable, then at that point, re-evaluate. Skip the lawyer bill and skip the insurance until the business is viable to the point where it is necessary.

There are tax benefits to an LLC when compared to a sole proprietorship, but you won't realize them unless you earn enough where taxes are an issue. From what I understand about an LLC, you have to put yourself on a salary - which can be an issue if you want to access your business money for personal use.

The biggest issue to worry about is extending credit to dealers. I don't know if dealers would pay C.O.D. or you would be extending credit. I've seen under-capitalized businesses fail because one dealer got into them for a lot of money, and then left them holding the bag.

Is it really that big of a pain in the assssssss?

Just remember nothing good comes easy.

Thanks Joe, that's what i was thinking as i've been reading through all the info on the web. I really don't need to spend much for startup. I have just about all i need. Also the farm to restaurant delivery service i want to join doesn't require insurance and there is no fee to join. I would be extending credit , i think they pay out bi-weekly.

Even in this %$%$%$%$e economy the local/sustainable food movement is going strong and continuing to grow! Ever gone to one of the 3 winter farmers markets? It's elbow to elbow most of the time. Also most the top local restaurants are all about this. They all love to feature sustainable locally grown foods on their menu. Some even have whole menus with locally sourced ingredients.

Can't be any worse then working in a kitchen and dealing with all the crazy people in the industry and getting paid crap!!!

Your starting to sound like a machinist.:smash:

Good luck. Doing something is a lot better than doing nothing.

Stay underground... And what ever you do, don't ever start a payroll... If you do, your doomed.
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It will only be me working . If i get too busy I will hire Guatemalans. I tried the underground way the past year , was a pain. All the restaurants want to pay by check ( which is a paper trail) and others are sketched out by the legality of it. I also missed a huge chance at publicity last year because of it. A popular restaurant in Westerly wanted to show case me and my mushrooms at a farm fundraiser at castle hill. I had to turn it down as i wasn't legit. I also feel becoming legitimate will draw articles in local publications , which will lead to $$$.

All good points. Have you considered looking into a dba?? I believe that's the simplistic aproach to starting a business.
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dba?

"Doing Business As". Its the simplest form of starting your own business....might be just what you need?

Once you have your business license from the town you are from, then you can get a checking account with dba you business name. Banks usually want to see it. Once you have the DBA account, you can deposit checks made out to your business name, simple. Now you can operate as a sole proprietorship. Your tax forms when you file will require the profit and loss forms and you are supposed to send in 4 quarterly estimated tax payments each year.
Like Bigfish said, doing business as.
Pretty easy to do.


Nebe, why are you domed if you start a payroll?

I run my glass gig as a dba.. Slip has it right... I will add that the most important thing to do is to use a program like. Quickbooks and file your taxes using turbo tax... If you use quickbooks correctly and keep it up to date by itemizing your expenses as you go, it's pretty easy.
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Cheferson

Listen to what Joe said above. In RI sole proprietorships can be single member LLC's. But it will cost more to start and file each yearas an LLC

Payroll is not required for you either way. It will be for your employees either way, though so avoid that until you grow a LOT more.

I am a cpa and this question is often asked. PM me if you have any ?'s.

Thanks for the help. So far it's looking good. I don't need any licenses from the health dept or dept of agriculture. Now im just waiting to hear back from the town if there are any zoning reg problems with what i want to do.
Best part is I just scored 50+ mushroom cultures ( $60-250 ea) worth over 5k for nothing! I sent the largest organic medicinal mushroom producer in the US and email asking if he would like to trade cultures. I had a handful of wild cultures that i cloned and some others i traded for. Not only did he give me 5k worth of cultures , but he is going to keep back ups of all the ones i have collected for free!

WHat is the best version of quickbooks for my situation? Can i get the basic one or should i get the better version?

I cant offer any advice, but wish you the best of luck!

Chef - it is a long shot but you may want to look into a company called Red Tomato in Canton Mass. I "believe" they may have someone that works with small time organic / sustainable growers though I think you are smaller time then what they would work with.

Chef , Good luck !! I'm doing the same thing except I'm growing oysters which in Mass requires permits up the wahzoo. I doing the sole prop. thing it seemed the easiest in Mass. Wife thinks I'm nuts to start this at 55 but here hoping its my retirement .

DBA is a sole priprietor. If you ever need to have employees , use a payroll service , its costs little and really helps if you are ever audited.

You need a tax ID number. Once you get that you can just do business. Some suppliers want to see a license to do business at retail if you will be selling directly to people instead of to restaurants etc. You get the license to sell at retail from the state. Since you are selling food , there probably will be no sales tax to worry about. That's why they want the license to sell at retail. It requires you to file quarterly reports and pay the sales taxes due.Talk to someone at the Small Business Administration. They will fix you up with a tax ID number. The zoning thing with the town can be a bummer. You might try saying that all you will have is a home office with no customers or suppliers etc coming to your home.You might also see if someone you know is in a business zone and see if they will let you use their address. The only thing they will see from your business is some mail.

basic.. unless you want to track your fungus inventory:rotf2:...

Chef

If you want a Tax ID # (federal ID #) you will need to go to the IRS website. It should take you 10 minutes to get one.

As far as Quick Books just get the basic 2010 package. You only need to keep track of receipts and disbursements plus A/R and A/P

i know allot about this
 

"one man" can manage a 50 x 50 plot and not much more.
so start small....

you need a way to extend the season at both ends so think green house's ....poor mans green house is not a walkin ....better to have *cold frames made from recycled single paned glass windows that are found free on Craig's list as well as the free used lumber. see "mother earth news" archives and or Eliot Coleman Books even better. he's the man!

problem with those is venting them so what you do want to purchase ( or "invest" into ) is the automatic temperature controlled openers ->see catalog

easiest crop:
you plant sugar snap peas on or around st patricks day and the support trellis has to be kevlar bullet proof or one day they will look so promising and the next day due to a wind storm like we're having today they will be thrashed and mangled making harvest an absolute nightmare.

they will grow right thru snow so plant them when you see 4 or 5 days of rain on the way 7 to ten days b4 the full moon . Dont forget the innoculant! so ya pre-soak the pea seeds to get them to swell up then dump in innoculant powder and shake (and bake) them up so they are coated in the black dust. then plantem 1 inch apart. this way they'll germinate wicked fast. trust me

you need a raised staging area for transplants.... so when you harvest ten heads of lettuce for example you immediately at the very same time plant
around twenty in the same spot never having "idle ground".

a good source of info is:
Mel Bartholemule books called cash from "square foot gardening" which is an invaluable resource on marketing strategies and growing tips too.

you need a clean up /washing area with gravel or some non muddy(non slip) surface and a recycled stainless steel sink with a washer hose. you will also need those fold and close stackable crates too, using them over and over again for each harvest .

Do not plan on labeling anything organic because the paperwork involved in doing so is worse than health care reform. better to just call it chefersons Veggies and just LEAVE the DAMMED (by the US goverment) "O" word alone! :uhuh:

spring gardens are great with fresh tilled soil, zero bugs, no weeds,
few pests ect...but remember that a properly planned fall garden will out grow it 2 to 1 and the colder temperatures is what make things like carrots turn sweet instead of bolting in summer heat.

Plan on 2 years of labor before you realize a profit because you'll need floating row covers when frost approaches...shade cloth A-frames to reduce sunlight to 50% and all that stuff ain't cheap.

When you plant out your wide rows remember that spacing is THE most critical aspect of all ....spaced to close they are too competitive and get elongated...to far apart and the weeds win the war hands down and :point: "you" will loose! most guaranteed...

spaced just right then you have created the perfect micro-climate where each plant shades the soil keeping it moist and weed free.
much less work and a far superior product.

that's the best advice i have for you... Cheferson
the money aspect

i'll leave up to someone else. :grins:

this is what you want to build for a walkin green house

http://i25.photobucket.com/albums/c6...greenhouse.jpg

Raven, cool info, but I think Chef is moving forward with a particular crop in mind.

good luck Tyler!