WarmGlass.com

Just in the start up stages of my art glass business. I want to make sure that I start off right and legally. I want to get feedback from other artists who are running a business as a Sole Proprieter. It sounds like it is the easiest way to get started but I am concerned that if for some reason I get sued, everything I own is up for grabs. At least that is my understanding. If anyone out there can give me some feedback on this, positive or negative it would be greatly appreciated.

If you own a home for example and it is in both your name and your husbands and the business is only in my name does that make your home up for grabs?


Karon

I have been a sole proprietor for 28 years. Don't get sued.

Thanks for the feedback Bert! Don't know why I would get sued, but you just never know in todays world :-}

P.S. I took a look at your web site - Love your work (wow)!

Karon

I'm also a sole proprietor, with no problems (so far!).

I did get a business insurance policy to cover liability in case of any problems. (Personal assets are still at risk beyond the limits of the policy, though.)

- Marilyn

Marilyn Kaminski wrote:I'm also a sole proprietor, with no problems (so far!).

I did get a business insurance policy to cover liability in case of any problems. (Personal assets are still at risk beyond the limits of the policy, though.)

- Marilyn

I do carry 2,000,000 in liability insurance and the house is in my wife's name (for complicated reasons).

Unless you're a very large corporation with many layers of officers / employees - - your assets will not be protected (in the event you are sued)
Going with a sole prop. is the way to go - for an artist. Liability insurance is always helpful.
Remember that your regular home insurance, often times, will not cover loss if a business is located in your home.

kbarbour wrote:... I want to get feedback from other artists who are running a business as a Sole Proprieter. It sounds like it is the easiest way to get started but I am concerned that if for some reason I get sued, everything I own is up for grabs. At least that is my understanding. If anyone out there can give me some feedback on this, positive or negative it would be greatly appreciated.

If you own a home for example and it is in both your name and your husbands and the business is only in my name does that make your home up for grabs?


Karon

I don't know what the potential liability would be under a sole proprietorship, but it was my understanding that my personal assets were fair game if I was ever to be sued. I was advised by my Atty when I started my business to operate as a LLC because an LLC (Limited Liability Company) limits liability to my business assets only and my personal assets are protected from becoming attached.

So that is what I did.

My sister-in-law was making a U turn, and my brother said, You are going to get a ticket. My SIL replied, Only if there is a cop around...and guess what... I think I'll err on the side of protecting my personal assets in the event there might be a cop around (or someone who thinks it's advisavle to sue me). Check with an attorney that is familiar with business law in your area to see which is the most appropriate route for you to go. Her expertise is probably worth the hourly rate she'll stick you for.

Cynthia is correct. Both LLCs and Corporations protect your personal assets. The main exception to this is if fraud is involved.

I would strongly advise spending some time reading through the Small Business Administration website. They have an excellent section on Starting a Business and a pretty good section on running a business for women. They also offer free or very low cost local advice from retired executives and such. Start here: http://www.sbaonline.sba.gov/

I absolutely encourage you to incorporate. The main reason for this is the self-employment taxes levied. Especially if you are not sure of your income, your "salary" is listed as "salaries for officers" and not subject to self-employment taxes, which can result in several thousand dollars a year--whether you make a profit or not. Check your state income tax laws. (NH doesn't have income tax - "Live Free or Die" --go, Bert!) But for most of the states, you're in for some big-time taxes. Been there, done that!!! - Barbara

Thanks to all of you for offering your comments and suggestions, I really appreciate it. This is the portion that has kept me from proceeding.

Karon

I've also just created an LLC. In reading up on it and talking to the acct and atty though, to protect against liability you must run the business entirely seprerately from your personal finances. This means getting a biz bank account, a tax ID that's different from your SSN, keeping books & monthly statements, having the biz licenses in the corp name etc.

Pam wrote:I've also just created an LLC. In reading up on it and talking to the acct and atty though, to protect against liability you must run the business entirely seprerately from your personal finances. This means getting a biz bank account, a tax ID that's different from your SSN, keeping books & monthly statements, having the biz licenses in the corp name etc.

All excellent advice, whether or not you're an LLC.

Pam, was creating an LLC a complicated expensive process, or just a matter of having an attorney draw up the papers?

Karon

In Oregon you can set up your own LLC and its not complicated.
I would check with the Secretary of State Business Division in your state to see what is required.
Harry Groth

kbarbour wrote:Pam, was creating an LLC a complicated expensive process, or just a matter of having an attorney draw up the papers?

Karon

Hi Karon,

I had an attorney do it because a friend volunteered to do it for free. In Nevada you can easily do it yourself by clicking onto the Secretary of State website, downloading the forms and sending them in with your $$, then waiting a long time while the wheels of government slowly process your request. In Nevada the filing fee is $75 and there's an annual update fee which I think is also $75.

Another issue to consider is whether or not you want to use a resident agent to be the front guy to receive the annual statement (officers update) and handle any other paperwork for you.

Try clicking on the webpage of your state and finding the Secretary of State page to see what the requirements are in your state. You could also Google on "incorporating in xxxx" to find out more. And. you don't have to incorporate in the state where you live. A lot of people do it in Nevada because we don't have a state income tax. I don't think that's an issue for an LLC though because the biz income is a schedule on your federal taxes.

You do need to make sure that the name you pick for your biz is available. If someone has already registered a biz under the name you want you'll have to either change the name or incorporate somewhere else. I think most state SOS websites have a corporate name search capability so you can easily look it up.

This may sound a little complicated but it really isn't. Lots easier than making consistant drop ring melts, which I've been working on for the last several days!

Regards,
Pam