I launched my handmade candle business 8 months ago and just went with a sole prop because it was quick and cheap. Now I'm seeing people talk about LLCs everywhere and wondering if I messed up. I don't have employees, just me in my kitchen. Revenue is maybe $2k/month. Is it worth switching now or did I already blow it?
Business Structure
Should I have started as a sole proprietor or an LLC?
You didn't blow it. Sole prop is fine for that scale. LLC is more about liability protection than anything else. If someone sues you over a candle, an LLC could keep your personal assets separate. But at 2k/mo, the extra paperwork and fees might not be worth it yet.
lol @ 'someone sues you over a candl'
I started as a sole prop for 3 years then switched to LLC when I started sellnig wholesale. Honestly the switch wasn't bad, just paid the state fee and filed a form. But for $2k/mo I'd probably wait until you're making more or have real assets to protect.
Not a lawyer but I've heard that sole prop is totally normal for side gigs. The main thing is getting business insurance either way. LLC doesn't replace insurance.
LLCs are overhyped for tiny businesses. You're fine.
I wish I'd started as an LLC from day one. Got sued by a customer (frivolous but still cost me $3k in legal fees) and my personal bank account was on the line. Sole prop felt cheaper until it wasn't. That said, my business was service-based with higher risk. Candles? Probably lower risk. But you never know.
The way I see it, sole prop is like renting an apartment, LLC is like buying a house. More protection but more hassle. You can always upgrade later. No one's going to arrest you for being a sole prop.
Just make sure you're tracking expenses properly. That matters more than the entity type at your stage.
Wait, youre making candles in your kitchen? Does your state even allow that without a commercial kitchen license? That might be a bigger issue than sole prop vs LLC.
MidnightToaster brings up a good point. Cottage food laws vary. But assuming you're legal, I'd say stick with sole prop for now. LLCs cost $50-500 depending on state, plus annual fees. Not worth it at 2k/month.
Also, if you switch to LLC you might need a separate business bank account, which is a good idea anyway. But yeah, I wouldn't stress.
I went sole prop for 5 years, no regrets. Only switched when I hired my first employee. You're solo, so why bother? The tax stuff is basically the same.
LLCs are a scamm invented by the government to collect filing fees. Fight me.
RustyNail that's not true at all. LLCs provide real liability protection. Don't spread misinformation.
For the record I wasn't trying to scare you.Just sharing my experience. For candles in a kitchen I'd probably stay sole prop. But definitely get liability insurance. That's the real protection.