AHello all,

I'm curious what business structure you chose when you started your business? Corporation, LLC, Partnership, Sole Proprietor?

My sister and I have been baking cakes for almost 8 months as a hobby but we are very close to making this a real business and we are not sure of the type of business structure we want. I've read up on some sites like legalzoom.com and the company corporation and we are leaning towards an LLC.

What did you chose? What were the benefits for you, if any? What challenges have you had because of your choice?

I'm in NJ and she's in NYC. We bake cakes in both states and wondering if it really matters where the business is formed?

Thanks!

Mikey

I think it will make a big difference where you decide to form your business since each state has different laws, regulations etc....  So I would suggest doing research in both areas of all the requirements for your business and see which would be best.  Also, are both you and your sister going to be the owners? If so you can't go the sole proprietorship way since that is only for one owner.  LLC is a good way to go in order to protect your assets in case something happens to the business. Be prepared to have some rough patches with your sister because it is hard to work with family.  I am speaking from experience and it was not fun to work with family, I worked with my brother and dad and at times I just wanted to strangle my brother.  Lastly, new businesses are super hard and a lot of work so going from a hobby to an actual business will be super tough so I would suggest doing as much research on all aspects of this business, not just the cake side but the business side as well. 

Regina, Thanks for the advice! I will research each state's pros and cons further. I also agree that working with family can be a challenge. We've only been doing this for about 8 months and there are times I'm sure that we want to strangle each other lol :) 

The reason we are looking to go from a hobby to a business is because we just keep getting so many orders and we want to make sure we take advantage of any tax benefits for businesses since we are investing our own money into supplies, tools, training, material and ingredients. Not including milage on our cars and gas and tolls and most importantly, our time. But I see your point a business is one thing and a hobby is another. We are looking to set up a studio bakery as I don't really want the hassle of running a retail bakery daily. We want some place we can work on and prepare our cakes thats not the kitchen table lol :)

We also want to ensure that we protect ourselves in case something were to go wrong (License and insurance)

I will continue to do my research and I greatly appreciate your advice.

Thank you again!!

Mikey