For those who started their own at home business...

Did you get anything other than an LLC and EandO insurance?

Replies to This Discussion

Permalink Reply by Andrew Garulay, RLA on January 3, 2011 at 3:02pm

You can be a sole proprietor and have a company name. I do. In my state (MA) you register the name with the town clerk. I have a resellers license in order to be able to mark up materials and collect sales tax on them in the rare cases where I do supply materials (services are not taxed here...yet).

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Permalink Reply by Tanya Olson on January 3, 2011 at 3:08pm

Mine are taxed (in state) but SD has a bimonthly on-line filing and payment system. They even send a reminder!

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Permalink Reply by Chris on January 3, 2011 at 3:20pm

with a sole prop aren't you personally liable for debts the company incurs? I guess it doesnt really matter though if you are small...

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Permalink Reply by Andrew Garulay, RLA on January 3, 2011 at 5:01pm

Yes, but if you own a corporation it does not completely protect you from debt either, especially if you own it all yourself.

There is not a lot of expense in what I and other residential/light commercial designers rack up. I've got a four year old lap top, two old plotters (one from Ebay for $150 and one given to me from an employer who upgraded), a blueprint machine (another hand me down that I seldom use), Acad Lt 2008, digital camera, measuring equipment, paper, ink/toner and gas. ... it feels like zero overhead.

It costs $1,000 to start an LLC in MA and then you have another tax number, more rigid record keeping and reporting, separate corporate taxes,and required liability insurance. That's a big chunk of time and additional overhead expense for a company grossing $10k. Grossing $10k is not a given for a start up either. I've been doing this for several years and that is about how much I can handle while holding down a full time job and a family.

Taxes are done on a regular 1040 plus a few other small sheets. I usually do them myself because I don't have much to write much off. ... very simple.

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Permalink Reply by mark foster on January 4, 2011 at 6:18am

I agree-- in a small service business, company debt is a minor consideration. Even if you incorporate, most companies who give you credit/loans (venders, credit cards etc) will require your personal guarantee anyway.

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Permalink Reply by Cecilia Schafler on January 10, 2011 at 8:41pm

Hi Chris,

I would definitely check with an attorney and/or CPA regarding which setup would be best for you in terms of taxes, etc. They can also set you up to deduct a percentage of utility bills, etc based on the s.f. of your office. Incorporating also help start and establish business credit. I started out from home almost 5 yrs ago and incorporated my business. I also had to get a home occupation permit that allows me to use my home address as an office address. Check your local regulations regarding running a home business as well as any HOA rules.

The opportunity came up to work for a big corporate client and that is when I got E&O insurance. Having it has allowed me to pursue a wider range of projects.

Good Luck!