Trying to start - Legal Question

[thillin]

I'm working on starting small with catering/concession. I'm working with the HD to certify my trailer.

But I need to start the actual business. LLC, S-Corp, it all starts running together. I need to make sure my personal protected is protected. What have some of you done? I'm trying to plan a time to check in with SCORE and SBA.

Anyone want to share the easiest safest route to take?

Thanks
Ty

[Spydermike72]

Hi Ty,

I would consult a lawyer for real answers as the LLC's and S-Corp laws differ for each state. I started an LLC as it is a lot cheaper and less time consuming (less paperwork) in Michigan, and offers the same protections as a S-Corp. You are on the correct path with going this route. One of biggest things my lawyer told me is to not mix money. Meaning start a business account at a totally different Financial Institution from the one you do your personal business with.

But, please consult with a lawyer in your area for the specifics.

[Ford]

If you incorporate then the business is covered for liability and you are protected. BUT if you are the cook then they can sue both the business and the cook so in reality that "protection" is not there. Bottom line for a 1 person show is you are on the hook personally.

I am just working under a DBA (doing business as) as a sole proprieter. I can mix money just need a set of books to show P&L and assets. Everything is under my ss#.

I'd talk to both an accountant, insurance agent and lawyer for advice before doing anything.

[thillin]

Originally Posted by Ford

I am just working under a DBA (doing business as) as a sole proprieter. I can mix money just need a set of books to show P&L and assets. Everything is under my ss#..

How do you seperate personal assets from BBQ business assets? List all equipment and receipts? Like now I have a trailer and smokers. If I use my $ to buy equipment, what decides if it's personal assets or business assets? I can start a business checking account, but I might use personal credit cards and existing cash.

[HBMTN]

I went through a local lawyer for my S-Corp. There are cheaper ways but I gely more comfortable dealing with a local lawyer. It cost me $850 to Incorporate my business.

[CivilWarBBQ]

Originally Posted by Ford

Bottom line for a 1 person show is you are on the hook personally.

Very true. That whole "corporate veil" stuff they teach you in biz school doesn't mean a thing for the small businessman. In reality you're firmly on the hook financially and legally because creditors will demand a personal guarantee and anyone who wants to sue you can bury you with legal fees even if a judgment is never made against you.

[Ford]

Originally Posted by thillin

How do you seperate personal assets from BBQ business assets? List all equipment and receipts? Like now I have a trailer and smokers. If I use my $ to buy equipment, what decides if it's personal assets or business assets? I can start a business checking account, but I might use personal credit cards and existing cash.

Bottom line is if you cook it you personally are on the line. Nothing else matters. They sue both you the cook and the business so take all the business then it goes to you personally. There is no fail safe unless the business hires cooks, food buyers, etc. Welcome to the world of small business.

But to directly answer the questiuon of sepration of business accounts if it's under you're SSN# then use any accpunt you want, if you set up a corporation then you must only use the corporate account to pay anything. Unless you book motels when travelling and then you can get that back as "expenses" but you need to write a check to yourself to pay the cc bill.

[C Rocke]

Originally Posted by Ford

Bottom line is if you cook it you personally are on the line. Nothing else matters. They sue both you the cook and the business so take all the business then it goes to you personally. There is no fail safe unless the business hires cooks, food buyers, etc. Welcome to the world of small business.

But to directly answer the questiuon of sepration of business accounts if it's under you're SSN# then use any accpunt you want, if you set up a corporation then you must only use the corporate account to pay anything. Unless you book motels when travelling and then you can get that back as "expenses" but you need to write a check to yourself to pay the cc bill.

The expense procedure from Ford is dead on. Best idea as a sole proprietor is to have all of your personal property, house, etc in a trust.