# Limited Liability company (LLC)



## blueskybeesupply (Dec 11, 2007)

It looks like forming an LLC in Indiana is only $90, which is $35 cheaper than Ohio. The forms are pretty simple and don't require a lawyer to file.

You can get beekeeper insurance which will give you personal (stings to others) & product liability, as well as insure your equipment against damage or theft (just hardware, not the bees), for as little as $350/yr.

Personally, I wouldn't want to pay for those expenses, until I was producing 500 pounds or more . . .

*With what you are producing, it would be cheaper to "lease" shares in your hives to folks and they get their share of the crop in return. This is how some folks get around raw milk sales in states where illegal. It seems to work. You just can't make direct sales. BTW, I'm not a lawyer--so, please take this as opinion. I would also make up a lease contract for them to sign.*

We live in a highly litigious society. It's a shame that some one could lose their farm because a customer ate an over-ripe tomato . . .


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## Bizzybee (Jan 29, 2006)

No way would I go into the headaches your going to get into by forming a corporation. If for no other reason the tax prep is enough to think twice about it. You should have a chat with an accountant or attorney before making a step like that. Laws have been written several years ago to pierce the corporate veils where negligence is involved, allowing pursuit of individuals within the corporation. There is some protection but it's limited to certain circumstances. If your goods make their way outside the corporations home state then you will have to file as a foreign corporation in any other states where the corporation does business. Just to mention a few of the things you will run into.

If you are worried about liable, look into a liability insurance policy to cover yourself as a food service provider. That may be covered under beekeeping policies? You should check to be sure of just what it does cover and what limits are carried.

A corporation implies no insurance in itself. Insurance will still be required and likely more so if your business carries the (Inc.) title. It implies big bucks even if there aren't any.


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## Barry (Dec 28, 1999)

Yes, check with your accountant to see if there will be a tax savings for you. If not, I sure wouldn't do it. I incorporated years ago only because of the tax advantage, but the paperwork I hate immensely. I still have liability insurance on top of that.


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## Dan Williamson (Apr 6, 2004)

sugar bandit #2 said:


> It just seems hard to do when it cost about $600 for a LLC here in Indiana for a hobby beekeeper.


Where did you get the idea that it costs $600???

I bought a CD called LLC Maker (or something like that) and the filing was at most $90 I think.

I produce alot more honey than you do but if you are going to sell to farm markets I'd have it. Friends and family are not likely to cause you problems. You don't know the people at farm markets and in this litigious society its not worth it.

So say it costs $150-$160 all together for the CD and the filing paperwork for the LLC. Compare that to potentially losing an 8-acre farm. Seems like a no brainer.

Obviously an LLC does not absolve you of your responsibilities or protect you from lawsuits but it can help protect your personal assets from those in the LLC. 

There is alot of info on the web. Just google LLC vs Corporation etc.... many places will lay out the benefit and drawbacks of different entities and how they work. An attorney can help you understand the legal implications and an accountant can help you understand the tax implications.

No way does it cost $600 unless maybe you have an attorney draw up all the paperwork and forms.

I also have liability insurance on the LLC. I don't know what that costs off the top of my head but it was less than I thought it would be when I first started researching it.


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## beemandan (Dec 5, 2005)

A CPA I spoke with some years ago told me that she'd do all the paperwork for me to form an LLC for $700 or she said I could do it myself and then she told me how. I did it myself. The Secretary of State's office (in GA) has instructions online. Although a bit tangled I waded through it. It also required filing with the feds for an Employer Identification Number (EIN) even though I don't have any employees. I, now, must file a quarterly sales tax form for the state. Income tax filings are more complex and if you pay someone to do it, it'll be much more expensive. If you do it yourself it'll be a much bigger headache.
As Biz pointed out, incorporating isn't a guarantee that your personal assets are safe from a lawsuit but it does provide one more safety barrier. Insurance is another.
I'd advise you to talk to a CPA if you are interested in any tax advantages and/or an attorney if you are concerned about the liability issues.


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## sugar bandit #2 (Oct 4, 2003)

"Where did you get the idea that it costs $600???"

I had called 2 different business attorneys in town, one said his consultation fee would be $80, the state form was another $90 and the remaining would cover his footwork until completed ($690 total). The second (business attorney), was recomended by a freind that sells veggies & flowers at the local farmers market and she paid a straight $600 for everything without a consultation fee (on paper anyway). This (LLC) was to include a Federal tax ID # that she maintains her business receipts with on a "Quickbooks" program she gives her bookeeping / tax service person. I think she maintains her LLC every 2 years for $30. She pays additional $ for these bookeeping services now that she is a corp. Hopefully, finding additional tax deductions will help offset these additional service fees.

"So say it costs $150-$160 all together for the CD and the filing paperwork for the LLC. Compare that to potentially losing an 8-acre farm. Seems like a no brainer."

I agree, but the additional $450-$500 for the peice of mind the LLC is properly filed by a "professional" is a hard pill to swallow for this hobby beekeeper.


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## Dan Williamson (Apr 6, 2004)

sugar bandit #2 said:


> "Where did you get the idea that it costs $600???"
> 
> This (LLC) was to include a Federal tax ID # that she maintains her business receipts with on a "Quickbooks" program she gives her bookeeping / tax service person. I think she maintains her LLC every 2 years for $30.


The Federal tax ID# is either Free or $30. I cannot remember which. I simply called a number (might have had to fax some paperwork) and gave them all the information and they sent me paperwork with my Federal EIN#. This number makes it easy to get bank accounts and credit cards for the business and (I believe) is needed to file your taxes under the LLC.

I also use quickbooks. You type in all expenses, all sales, can generate receipts and invoices. I take all info to an accountant at the end of the year. They go thru the paperwork and help me find the best tax advantages to handling depreciation etc. if needed.

Bookeeping for a few hundred pounds of honey is simple. There is no need for quickbooks etc. Just a simple spreadsheet in excel is plenty.

The state will send you a notice every two years telling you that your $30 is due.

Here is a link to the Secretary of State website. http://www.in.gov/sos/business/corps/guide.html

Here is a link to the forms:
http://www.in.gov/sos/business/forms.html

I believe you can register an LLC right online from this page. Just scroll down till you see Limited Liability Company (domestic) and you can see a "file online" link.

Attorneys want to make it seem intimidating and difficult so they can charge you. It is neither. I would get a CD or something that helps you draw up the paperwork. You need to make a list of assets the LLC owns. (ie hives, processing equipment, etc.) Here is the software I used:
http://www.nolo.com/product.cfm/objectID/749AB100-5AFD-479C-A637A296A830F6E2/111/


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## MapMan (May 24, 2007)

Barry said:


> Yes, check with your accountant to see if there will be a tax savings for you. If not, I sure wouldn't do it. I incorporated years ago only because of the tax advantage, but the paperwork I hate immensely. I still have liability insurance on top of that.


Liability insurance is the answer, if you make enough in sales to warrant the cost. However, certain types of corporations will protect you from personal liability in cases of accidents or other claims. You'll still have to pay for any liability action against the corporation, until your assets aren't available, and you can then dissolve the corporation. Corporate paperwork and additional tax structure accounting is a royal pain in the ***, though.

MM


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## No_Bivy (Nov 25, 2008)

I am Inc'd....cost a grand. I file quartely and My coporate return is around 600. It is a headache. I have two full time employess. Sole prop was much easier......oh well


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## alpha6 (May 12, 2008)

No Bivy...go sole prop LLC and pay your two workers as contractors on 1099's. They are responsible for their taxes so you are not paying the govt. the SS or anything else on them. Plus they take more home so they are happy and its not your problem if they file or not.


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## No_Bivy (Nov 25, 2008)

alpha6 said:


> No Bivy...go sole prop LLC and pay your two workers as contractors on 1099's. They are responsible for their taxes so you are not paying the govt. the SS or anything else on them. Plus they take more home so they are happy and its not your problem if they file or not.


no dice there bro......I tell them were to go and when to go ...so they are employees. 1099 will raise a red flag to the feds...truct me. I am a full time tree service, and I play by the rules. The Inc protects my personal assests if there is a law suit......I hope.

By the way, I pay workers comp on them which is 46%of thier payroll....sucks but the job is dangerous and I would not hire without it. I know this is way out of bounds for bee stuff, but I saw this thread and figured I would respond.


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## magnet-man (Jul 10, 2004)

The attorney and CPA have to make a buck because they do so few. If you do thousands like the on-line services and require the client to send the paperwork in they can make money. The one thing a corporation can offer is a reduce audit risk. The reduced audit risk really only applies to C corporations though. To gets the real tax benefits from this type of corporation it takes lot of work when structuring the ownership and naming the who the officers are. Lots more record keeping than a sole proprietorship.


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## No_Bivy (Nov 25, 2008)

S-corp here......yes paperwork, but I am in a high liability biz.:doh:


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## Bizzybee (Jan 29, 2006)

I hear ya NO. My liability insurance alone was 30K a year to top it off. You're right, 1099's are a train wreck waiting to happen!

I was an S-Corp also. At least at the time you could reduce your salary and receive dividends to avoid some of the SS taxes.


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## No_Bivy (Nov 25, 2008)

30k for liability....wow! What was that for? My liabilty is about 3k per year....but my workers comp is 46% of payroll, so every 10k=4600 to the insurance company.


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## Bizzybee (Jan 29, 2006)

I had to carry a 2M liability, 4M aggregate policy for the work I did. I was in directional boring for about 5 years. It was classified high risk because of the utilities I had to work around. And the fact that there was so many bozos not knowing what they were doing in the business, ripping all of them out of the ground. It was busting the bank for the insurance companies to cover them. Not that I didn't put some stuff on top of the ground for them, but it was because the owners didn't identify it before I started work. I only had a couple of small claims where I was at fault. So I did get along very well with my carrier.

GA was pretty forgiving on workman's comp and un-employment as long as you didn't have claims against you. Luckily I never had any accidents with injuries and only had to fire one, but I was covered by their bogus work habits and I had it well documented.


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## No_Bivy (Nov 25, 2008)

that does seem high liabilty......


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## Durandal (Sep 5, 2007)

*How do the insurance folks like to run the yards you have on property owned by others*

We've layered our farm in three LLCs and a heavy cover of liability insurance (make sure it covers bees).

We also board horses and have bridal trails, which trust me, even with the new equine liability laws in place is still a major headache. Nothing like bees...yet.

I am curious how folks have rented yards covered. Is it under their liability clause or are there different agreements with land owners. That is one I have yet to tackle since everything is still on my property. 

How do the insurance folks like to run the yards you have on property owned by other people?


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## Durandal (Sep 5, 2007)

Double post.


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## Eaglerock (Jul 8, 2008)

beemandan said:


> A CPA I spoke with some years ago told me that she'd do all the paperwork for me to form an LLC for $700 or she said I could do it myself and then she told me how. I did it myself. .


You didn't state how much you saved by doing it yourself. What was your total cost?


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## beemandan (Dec 5, 2005)

Eaglerock said:


> What was your total cost?


I believe that the registration fee for the Secretary of State's office was $35. The number of hours spent and the 'misery factor'.....if I had it all to do again and she would do it for a couple of hundred dollars, I'd pay her to do it. $700...nope.
There is the annual cost of maintaining the registration...again about $35/year.
An additional cost is the annual expense of having the corporate taxes done. Those are filed separately from your personal income taxes. That runs about $300+ per year. I could probably do it myself but if I screwed up and wound up in an audit.....I'd, for sure, be in waaay over my head.


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## Eaglerock (Jul 8, 2008)

beemandan said:


> I believe that the registration fee for the Secretary of State's office was $35. The number of hours spent and the 'misery factor'.....if I had it all to do again and she would do it for a couple of hundred dollars, I'd pay her to do it. $700...nope.
> There is the annual cost of maintaining the registration...again about $35/year.
> .


I wanted you to let him know what the cost difference was. I have looked into LLC and Inc. I don't think the effort is worth it. Maybe one day I will for my other businesses, not sure I would ever for a bee business, unless I was into it deeper. If I had 500 hives or maybe even 300... but not with 50.


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