Reptile business...

Adam, True, the level of protection isn't what it used to be, but something is still better than nothing.

Shelby, When I set up my Chapter S Corp. it cost $400. In AZ you can set up an LLC for about $200. There are only two types of LLC that I know of, the standard LLC, and a PLLC (professional limited liability corp) that is designed for professionals such as doctors, lawyer, and realtors. I am a realtor, but my attorney and accountant/tax advisor set up an S Corp for me (service corp) because real estate is not the only thing I do.

I don't know what an S corp is.. my dad has talked to me about it but it went over my head. *sigh*

Would you recommend a LLC for a snake breeder? How do I go about forming one?

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Originally Posted by Shelby

Would you recommend a LLC for a snake breeder? How do I go about forming one?

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oh boy....someone that knows just as much about this stuff as me :D

I figured that since ALOT of people on this site are talking about breeding ball pythons that this would be a really helpful topic....I plan to own my own business one day anyways...so if i can learn that kinda stuff now, it would be really helpful ;)

Ditto, Daniel. Especially since I plan on breeding one pair of snakes and selling babies this year.. I also have a budding art business. Getting requests from co-workers now.. lol

An S Corp is a corporation the specializes in personal services, as opposed to manufacturing or construction. There are specific rules that apply to each type of corp regarding what they can and can't do in regards to taxes. LLC are more flexible than corps, and are somewhat easier to maintain, there is certain record keeping that must be done to maintain status as a corp. So, an LLC would probably be your best bet. Really, if I were you, I'd find a really good accountant, who is an Enrolled Agent (meaning he is authorized by the IRS to represent you in tax court) and who's been in the business for a while. Sit down with them and discuss your financial situation, and where you plan to be in 5 years, and see what they say.

Would the LLC also apply to those individuals who just want to dink with breeding as a hobby and do an occassional sale here and there? I would suspect some degree of protection would be a "nice to have".

You can incorporate or form an LLC at any time, for any reason. And it makes no difference how much business you've done, or how much you plan on doing. As I said earlier, it's better to get the structure in place before you start making money, so when you begin making it, you're not paying an arm and a leg in taxes. Again, find a good, knowledgeable accountant, who's been around the block a couple times and isn't afraid to go nose to nose with the IRS, and write out a 5 year plan with him.

LLC's are perfect for a home based breeding business owned by a single individual. With LLC's, you don't have to mess with issuing stock, boards of directors, and they allow for pass through profit taking.

Corps and S-Corps are really designed for larger organization that might have multiple partners and/or investors. Most of the time with corps and s-corps, owners must be paid a salary which is taxed when paid and when received ... and then profits of the corp or s-corp are taxed (at a higher rate) as well.

With an LLC or sole proprietorship (which is not a corporation but still a viable business entity) the profits are your salary and are only taxed once.

For most people, a sole proprietorship is just fine.

-adam

Ok.. bear with me here. What's the difference between an LLC and a sole proprietorship? Does it cost the same amount to start either one?

As I understand it, when you create an LLC or incorporate, you create a separate, independent entity that conducts business. That's where the layer of protection is . With a sole proprietorship, YOU are the business. The tax issues may be very similar to an LLC, but if something goes wrong, your butt is directly in the line of fire.

I don't believe there's any cost in setting up a sole proprietorship, other than printing the letterhead.