Depending on your personal assets, you might need just an
"umbrella" insurance policy.  Since my hobby is beekeeping.  I only have 15
hives.  My home owner's insurance covers the honey sold.  I pay an
additional approx. $100 per year for $1 million of liability coverage.  This
policy has a $50,000 deductible which is the amount my regular home owner's
insurance will pay.  In effect, I am increasing my home owner's liability to
$1,000,000.  check with your insurance agent.  This will work as long as I
am able to say my beekeeping is a hobby.
 
        Check to see if your state allows Limited Liability Companies (not a
corporation).  This form of business allows the liability protection of a
corporation but with none of the headaches of a corporation.  In Oklahoma,
the cost is $100 per year to the state and there are kits for around $30
that will let you set up the company.  The company is like a partnership
with straight forward tax flowing through to your personal income tax form.
The LLC return is informational and no taxes will be owed on the LLC.  The
income will go straight to your personal income tax and is taxed at your
personal rates.  NO, this is not a limited partnership.  Similar but not the
same.
 
        Remember to use seperate checking accounts for the business.  This
helps guarantee the seperation of the business from your personal assets for
liability reasons.
 
        LLCs and LLPs are relatively new forms of business in the US.
Limited Liability Companies and Limited Liability Partnerships are hybred
types of businesses.  For once, government got something right.  You get the
benefit of liability limited to the business assets, but none of the
headaches of a corporation.( coprorate tax, minutes of director's meetings,
franchise taxes, state fees, etc.)  I recommend this form of business set-up
for all "small" businesses.  My farm is set-up this way.  I am the managing
partner and get 50% of the income.  My wife is the "silent" partner and gets
the other 50%.  If we ever make money, I will pay social security tax on my
50%, but my wife will not have to pay social security tax.  There are lots
of other benefits.  CHECK IT OUT!
 
        If you do a little research, you will see that a lot of large
closely held corporations have switched to the LLC  and LLP format of
business.  An example is the large accounting firms and law firms.  If your
lawyer doesn't know about LLCs and LLPs then have them look into it or get a
better lawyer.
 
Richard L. Barnes, CPA
[log in to unmask]
 
At 05:58 PM 7/27/97 -0500, you wrote:
>I'm starting to sell some of my honey--it's still strictly an amateur
operation and I estimate we'll take in between $500-$700.
>    My lawyer-brother thinks I need to establish a corporation and the
whole nine-yards to protect against the cranks out there who will sue anyone
for anything.  Two questions:
>     A.  What do you professionals do about this problem?
>        B. What course do you recommend to amateurs, or does selling make
me a professional?
>
>
>Thanks,  Bill Mares,
>
>