Teach Soap

Hi all...

I've asked a similar question on another forum so I apologize to any of you who already read it there. I just get so much great info here that I didn't want to miss out on more great input.

So in a nutshell, I'm finally easing into the process of planning to sell some of my soaps. I've made countless batches over the past year and feel comfortable with my product, and have also received great reviews and requests from friends and family. I'm very proud of my product and this seems like the next logical step... a big hairy scary step

This would be my first independant business venture, though I do have family and friends who can help with some of those issues. The thing is I'm not quitting my regular job or going out to craft fairs every weekend. It could be a while before I try selling online. I have one wholesale opportunity and there are a couple of places I could set up a booth occasionally. For now I mainly just want to keep making soap and help cover some of the costs while slowly testing the waters to see if I might want to go larger. I wouldn't really anticipate a meaningful profit until I kicked things into a higher gear than I am planning for the immediate future.

I've been doing A LOT of reading and still have many questions but right now I'm focusing on writing a business plan. Generally speaking... what are the absolutely CRITICAL steps I must take before I begin selling and what could I possibly let slide for a while if necessary?
I'm cool with obtaining product liability insurance and registering a business identity in my state. And I am pretty sure I can find out about getting a tax ID. But do I need to setup an LLC, report quarterly taxes, get an accountant, trademark my company name?

I know many of you have been down this road and I would appreciate any guidance.

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- Mickey!

Up-front disclaimer - I am a corporate and real estate paralegal in my day job, so I might be about to write something that is more complicated that you wanted. But I'd be glad to answer questions if I'm being convoluted.

That said - it's kind of hard to answer those questions - because a lot of the things you're still wondering about, like the business structure and estimated tax payments, depend a lot on your personal financial situation.

For example, I didn't have to set up quarterly estimated income tax payments, because I have daytime employment and they withhold taxes. I was able to look at my estimated tax liability, and my write-offs, and adjust my withholding to account for that income as well. If I wasn't employed, or my day job withholdings and deductions didn't cover the estimated tax liability, I might have needed to make quarterly payments.

I chose to be a sole proprietor - because in my state the LLC fees and taxes are quite high, and they outweighed tax advantages. Plus, the liability protection of an LLC is far from bulletproof, and better covered by an insurance policy. But that was based on my assets that needed protection, and my personal opinions (of which there are oh, so many, lol).

What I'm getting at here, is that your situation dictates your needs, and nobody else's experience is going to override that. Rather than collect varying info from a public forum, you'd be far better served to visit an accountant who handles small businesses, or a local SBA office, and lay everything out for them. You need to discuss some personal financial details that are better handled by a discreet professsional, not a public forum.

(But I wish you the best of luck in selling!)

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http://www.magichandsworkshop.com
http://www.magichands.etsy.com
http://www.magichandsworkshop.blogspot.com

I ditto what Magic Hands said. We have a tax/financial advisor who handles tax/business issues for all of our businesses. There are also sales tax issues that vary from state to state.

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HEAVENLY SCENT SOAPS

Ok... that helps (I think )
I'm still getting used to this idea of charging for my soaps and being a tax collector.
I do know an accountant who has helped me with my tax returns in the past when things got a little too complicated for me... though mostly I have done my own returns using Turbotax. I was considering getting him involved later anyway.

I guess the big question for me right now is how far I need to take things like that if I'm only really expecting to sell a very small quantity in this tax year. But I don't see any harm in running this past my guy to see what he says.

I mainly want to be able to "dabble" in selling for a bit with no real pressure while protecting myself as much as is practical. And if this idea DOES happen to take off later then I don't want to have to go back and re-do everything I've already done becuase I wasn't thinking big enough or smart enough. I hope that makes sense.

Thanks for your help and if anyone else has any other thoughts or suggestions I'm all ears.

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- Mickey!

I think that it is very good that you are planning ahead, thinking things out, and asking questions! You are taking a very good approach.

One of the reasons that I recommended that you consult with a professional is because they can make you aware of things that you hadn't thought of. As an example, I donate a lot of my products to charity (food pantries, charity raffles, fund-raisers, etc.). Our tax advisor told us that we can write off the costs of the materials that go into making these donation baskets. I didn't know that for this year's taxes, but I will be prepared to claim it next year.

GOOD LUCK and have fun! Sounds like you already have a good start!

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HEAVENLY SCENT SOAPS

Something that hasn't been mentioned, and that could be important to you later, is to figure out if you can get a domain that's reasonably close to your company name--and if you can't, if you need to change your name. It's also worth checking out usernames on social media sites (like Twitter and Blogger) to see if your username is free, as well as misspellings of your website name, to see what comes up. It's not the end of the world if you can't secure everything under the sun, but it's good to know if there's someone out there using a name you might have used as their blog name (which might confuse people if they're focused on something you're not, and the reader can't tell the difference) or if the difference between "bestsoapintheworld.com" and bestsoapsintheworld.com" leads to an adult site!