LLC + EIN = EZ!

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Saturday night, while enjoying Miss America (had the TV all to myself, what can I say), I got some more important business stuff accomplished.  bobaloo! is now officially bobaloo! LLC!  Hooray!



As I’m sure you all remember, my SCORE mentor advised me to set up my company as an LLC.  The main reason is because it limits my personal liability to a certain extent, which is important for someone who sells children’s products.  And it was so stinkin’ easy it had me wondering why I didn’t just do it from the start!

Here in Indiana (and I think in most other states) you can submit all the necessary info to set up your LLC on the state website.  I didn’t even really have to put in all that much information, basically just my name, address, business name, and phone number, plus a few other basics about the business.  I paid a little less than $85 and that was it!



I figured since I was on a roll, I might as well go ahead and apply for an EIN from the IRS, which can also be done online here.  There is also a great FAQ about EINs here and a really helpful page about starting a business here.  That was super-quick as well and I had the number as soon as I finished answering a few questions.  As I understand it, an EIN (or tax ID number) is kinda like the business’s social security number - I’ll use it to open a bank account and file taxes for the business.

Seriously, all of this took me maybe half an hour (about the length of the talent section of the show - what about that ventriloquist, eh?).  I wish I had known from the beginning that it was so simple to do.  I wouldn’t have had to bother with that DBA that sat on my to-do list for months.  First thing Tuesday morning I had the confirmation that my LLC was approved in my inbox.

So next up on my list of paperwork and licenses is getting my sales tax license, which I honestly should have filed for from the beginning.  I’m reporting my income from the business on my personal taxes for 2010, so I’m just going to have to pay the sales tax.  If I had set up the whole sales tax thing before I started selling I would have known exactly how much money to set aside.  This is another task I can take care of online, but the EIN takes two weeks to appear in the IRS database so I think I’m going to wait until the end of the month.

How are you guys setting up your business?  Are you a sole proprietorship, LLC, something else?  Haven’t decided yet?  Have no clue what’s what?  I tell you what, I may have a business-y degree, but it’s a challenge to keep up with everything!

All of the acronyms in this post make me think of that Boyz II Men song from back in the day.  You know the one, at the end they say “Boyz II Men, BBD, ABC, the East Coast Family?  I had to google it to find the name – it’s Motown Philly!  How could I forget that?

Need Some Free Business Advice? Check out SCORE!

Tweet My uncle was over the other day and mentioned that he heard one of the owners of Vera Bradley speak.  He was talking about how that company started like many of us did – with a little bit of money and a good product. 



I was reading about Vera Bradley on their website and noticed they used an organization called SCORE to help get the business up and running.  You can read all about SCORE here, but basically it’s a group of volunteer business experts who give free and confidential business advice to new business owners.  Turns out they even helped Jelly Belly!

I had a meeting with Jim Smith, a counselor at my local SCORE office, last week.  I mostly wanted to learn more about accounting and tax laws and luckily Jim is a CPA.  He gave me such great advice and encouraged me to call or come back anytime.

He gave me a few big recommendations.  First, it would be a good idea for me to set bobaloo! up as an LLC instead of a sole proprietorship.  As an LLC, my company would be a separate entity.  This is pretty important considering I make products for kids and babies.  As I understand it, if (God forbid) something would happen and I was sued, as an LLC only my business assets would be at stake.  I’ll have a bank account in the business name instead of my own, and I will have to file a separate tax return for bobaloo! instead of just adding it on to my personal taxes on a Schedule C.

Second, he encouraged me to get business insurance.  I emailed our insurance agent Paul (who has always been super-helpful with our own insurance) to get a quote so I can get an idea of the cost.  To be honest, I know diddly about business insurance, but I’ll pass on what I learn after I talk to Paul.



Jim also recommended I keep paper records of everything and file them away.  I don’t currently print out sales invoices or email receipts, so I’ll have to get used to that.  Luckily printer ink is deductible!

I highly recommend checking out your local SCORE office even if you’re planning on keeping your business small.  It was easy and quick, and I learned SO much.  They have 364 offices around the country so there’s bound to be one near you.

I’m going to tackle the LLC first, so I’ll keep you guys updated on my progress.  It looks like I’ll be able to do most (or maybe all) of it online.  If you remember from my attempt to get a sales tax license, Indiana’s government website is kind of a train wreck so we’ll see how it goes.

Where do you go for business advice?  The internet, books, local business owners?  The more resources the better, so let us know your favorite!

Just a note – the advice I received (and my interpretation of it) may not work for you.  Make sure you talk to an accountant or other professional to get the best advice for your situation!