Business type: which should I choose?
 
 

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Business type: which should I choose?

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    12-20-2012, 10:55 PM
  #1
Weanling
Business type: which should I choose?

So, my lesson business is really taking off, and I want to apply for a business license but I don't know where to start. I ride horses.. I don't know much about law or business. I need to learn though.
I called the county tax collectors office and they said I need to contact the city council in the city I do business. However, I teach lessons in one city, and sometimes trailer to another city to teach, so I will probably need a license in both cities, right? I also want to switch barns as soon as I can, and that would be in a 3rd city.
I guess I am thinking it's between individual, sole proprietorship and non profit. I really don't make a profit anyway, haha, my lessons really just pay for my hobby. I teach because I love it. I love helping the next generation of horsemen and women become good responsible caretakers of horses. My focus is on horsemanship, not just riding. My lessons include as much ground work and care as they do riding. I could see myself getting into therapeutic riding in the future. My main goal is to take the passion kids have for horses and mold it into a skill that allows them to be responsible and safe around horses. I want to fully prepare them to own a horse by time they are done taking lessons from me. If I could make enough profit to pay for my insurance and the care of 2 or 3 horses, I would be happy.

So here are the options:
Individual
Sole Proprietorship
Partnership
Corporation
Nonprofit organization
Government Entity

I don't know much about business, so any information would be greatly appreciated. Thanks!
     
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    12-21-2012, 01:39 AM
  #2
Green Broke
I don't know much (so people feel free to correct me!) but I'll tell you what I think.

Partnership and Corporatisation both imply more than one owner (not suited to you).
Government Entity (not you)

Which leaves Individual, Non-Profit and Proprietorship. Non-Profit generally refers to charities etc. If you do want your lessons to pay for your hobby then chances are you making a profit. If you're not using your horse for lessons then you probably won't be able to count that in your costs. So I would go for something like Individual or Sole Proprietership. I just googled it and it said that those two basically have the individual and business as the same thing so you lodge tax information with your personal stuff.

If you have a non-profit you would probably have to have it functioning as something separate to your individual finances and be able to account for money.

I would imagine that these would be relevant state wide, if not nationwide, could be totally wrong though.

Personally I'd probably go for "individual".
     
    12-21-2012, 10:18 AM
  #3
Banned
First of all, "individual" and sole proprietorship are the same thing.

There are really only two considerations in choosing the legal organization of your business..taxes and liability.

I could give you a long tutorial on the different forms of orgainization, but the best thing you can do is go to a good CPA that is experienced with business accounting, and have a discussion on which legal organization would be best for your circumstances...
     
    12-21-2012, 10:29 AM
  #4
Trained
Contact your local small business administration or go to their website. You should find a guide to what you need more or less.

I think you should incorporate into an LLC. If something happens they would sue the company and not you personally. However a lawyer can help you sort out the documents as well as a CPA.
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    12-21-2012, 10:53 AM
  #5
Green Broke
A Limited Liability Company would probably be best suited to you. Like DA said, if someone sues, they can only sue your company and would not be able to go after your personal stuff. If you filed a corporation, they could take you for everything. LLCs are the most popular entities right now. I work for a corporation supply company and the majority of the books we do are for LLCs.
     
    12-21-2012, 01:33 PM
  #6
Banned
Quote:
Originally Posted by Kayella    
A Limited Liability Company would probably be best suited to you. Like DA said, if someone sues, they can only sue your company and would not be able to go after your personal stuff. If you filed a corporation, they could take you for everything. LLCs are the most popular entities right now. I work for a corporation supply company and the majority of the books we do are for LLCs.
LLC's do not guarantee that you cannot be sued personally. They do generally make it more difficult, but LLC's, just as corporations, fall under state (not federal) jurisdiction, so the laws pertaining to them vary from state to state.

The US Small Business Administration cannot advise you which legal form of organization is best for you - or at least is not supposed to. (I am retired from SBA). They can only provide you information about each form of organization.

As a reminder, giving legal advice to someone is against the law unless you are a licensed attorney.

You can investigate the different forms of organization and decide yourself, or as I said earlier, seek advice from a CPA, or better yet appropriate legal counsel.

The primary matters that need to be taken into consideration when selecting a legal form of organization are the type of business, exposure to liability issues of the business, the amount and nature of your personal assets and the assets you are likely to accumulate, your personal current and proposed tax parameters, and the corporate and LLC tax and liability laws in the state in which you live.

OP, as to the other question you posed, generally speaking you only have to be licensed or registered in the jurisdiction in which your primary business is located, so normally you aren't required to have a license in other towns you might work in unless you maintain an actual business location there. You will need to check with your county clerk, and city clerk if your business will be within city limits, and check your state website for any state requirements...
     

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