So I started a small side thing last year, designing and selling laser-cut plant stands, and it's done way better than expected. I'm still just a sole prop, but now I'm getting wholesale inquiries and one shop wants to carry my stuff. My spouse thinks I should form an LLC before anything goes sideways, but I'm honestly not sure if it's overkill. I work full time in a totally unrelated field. Any thoughts on whether a separate LLC makes sense now, or should I wait until it's more "real"?
LLC
My side project is growing, and I'm considering a separate LLC
How much liability are we talking? Plant stands don't exactly explode. But wholesale means contracts, and contracts mean someone could sue you if a shipment is late. LLC is cheap insurance for peace of mind, imo.
Not a lawyer, but i'd say the bigger question is whether you want the business to be a separate legal entity from your personal finances. If you're already keeping separate books, the LLC part is easy. If not, start there.
My cousin did the same thing with woodworking and formed an LLC right before his first wholesale order. Said the paperwork was annoying but his accountant was happier. lol not exactly a ringing endorsement
Plumbbob makes a good point. Separate books first, then decide. Also check your state's ann ual fees—some are like $50, some are $800.
Wait, are you making plant stands from lasers? That's awesome. Sorry, no LLC advice. Just wanted to say that.
Plant stands don't explode, but a laser cutter can start a fire. Do you have business insurance? That's probably more urgent than the LLC question.
Marlowe raises a good point that I didn't think about. LLC doesn't protect you from everything, especially if you personally did something negligent. Insurance is the real shield.
I'll be the dissenter. Don't bother with an LLC until you're actually signing a lease or hiring someone. For a side project selling to one shop, it might just add filing fees and a separate tax return for no real benefit. Sole prop is fine for now.
Blue_otter, you're ignoring the wholesale contract thing. If a shop orders 200 stands and you can't deliver, they could come after you personally.
Sure, but what's the realistic damage? They'd have to actually sue. Most small shops just cancel the order and move on. I'm not saying never—just not yet.
This thread is giving me flashbacks to when I formed my LLC. The state website was down for a week and I ended up mailing a check like it was 1998.
Appreciate the range of takes. The insurance point is a good one—I don't have any business insurance yet. And yeah, the separate books thing is something I've been sloppy about.
Harold's check story is why I'll never complain about my state's portal again. Or I will, but less.
OP, seriously look into a general liability policy before the wholesale order. LLC won't cover a fire claim if you were cutting in your garage.
Marlowe, is that true if the LLC owns the equipment? I thought the whole point was separating personal and business.
Plumbbob, it depends on a lot of things, but if you're personally operating the laser in your own garage, an LLC doesnt magically make you not the person who caused the fire. That's why insurance matters. Not a lawyer though.
This turned into an insurance thread real fast. Not complaining, just observing.