Considerations for starting an LLC?

[FjordBCRF]

As of yesterday, I am now the proud and somewhat overwhelmed owner of my very own LLC!

I will soon be wrapping up formal certifications as a health coach and nutritionist which I have wanted to do since about 2008 and will be offering my services to adult equestrian with chronic health conditions of any kind. Having multiple chronic and autoimmune conditions myself, this is all stuff I live and breath and understand how daunting it can be and how therapeutic our own horses can be to us.

The LLCs goal is to help my clients identify and/or define/redefine/reach their health and horse goals with the understanding that chronic conditions repeatedly and sometimes permanently cause our goal posts to move, which can be very discouraging. My “good enough” goal would be that this service covers a nice chunk of my own horse expenses which would open up the ability to invest more, and is something I could continue to do when I hopefully someday retire a little early.

Im also open to it pivoting to some kind of hybrid service I could offer coaching online to people who aren’t local which I imagine I will have to look at differently if I am doing business with people out of state, but I haven’t really gotten that far yet.

Longer term, we’re planning at some point maybe 10 years off to buy property and build a house and small easy keeper friendly barn. A growth opportunity for this would be to have a couple preferably fjords but probably minis that I could take TO people. I would LOVE to be able to coordinate with elder care facilities and basically bring therapy ponies to people to enjoy. I’d like to consider that as an opportunity to do non-profit type work which I have to further research as well LOL.

I’m considering investing in a BEMER set (or something similar) to offer for local clients horses as well that we could pop on while having a coaching session. Or just on it’s own if people aren’t interested in any kind of coaching.

Given this has been a pretty low expense start up (minus the BEMER), the risk of it not working out is very low. Im not out much if it doesn’t.

Ive bounced things off friends/fellow horse people in my real life and have gotten great feedback so far. Any words of wisdom from fellow LLC owners?

[moonlitoaksranch]

Congratulations!

[clanter]

@FjordBCRF

but probably minis that I could take TO people

when we have taken our minis out into the world, often they are on surfaces made for humans, we found the Build A Bear combat boots fit the minis feet very well. These have rubber soles that give them a non slip footing …at less than nine dollars a pair verses the made for minis boots that cost over $200

Any words of wisdom from fellow LLC owners?

never had a LLC but several companies ongoing at the same time… Separated Checking accounts for all, and having relentless in-depth records of everything makes for an easy audit

[luckymaverick]

Regarding minis, check out the Dinky Ponies out of England. She’s on Facebook and IG doing just that, using Cavallo boots

[Displaced_Yankee]

Congrats!

CPA chiming in: make sure you have a clear delineation between business use and personal use regarding your expenses. Horses and horse related business remain a hot button issue with the IRS.

@FjordBCRF

My “good enough” goal would be that this service covers a nice chunk of my own horse expenses

This is where people get into trouble. There is no issue with profits covering your horse expenses. But just because you use your horse twice a week for your business…doesn’t equal “I can expense his vet, feed and farrier bills as business costs”. These should be pro-rata for how much they contribute to your business or how much they contribute to your hobby (ie: horses).

Happy to help if you have other tax/income related questions!

[FjordBCRF]

@luckymaverick

Regarding minis, check out the Dinky Ponies out of England. She’s on Facebook and IG doing just that, using Cavallo boots

She is our inspiration!!

@clanter

when we have taken our minis out into the world, often they are on surfaces made for humans, we found the Build A Bear combat boots fit the minis feet very well. These have rubber soles that give them a non slip footing …at less than nine dollars a pair verses the made for minis boots that cost over $200

Clanter, I either imagined it or I remember reading about the Build a Bear options for mini’s on a different topic. That is such a good idea!

@Displaced_Yankee

Congrats!

CPA chiming in: make sure you have a clear delineation between business use and personal use regarding your expenses. Horses and horse related business remain a hot button issue with the IRS.

@FjordBCRF

My “good enough” goal would be that this service covers a nice chunk of my own horse expenses

This is where people get into trouble. There is no issue with profits covering your horse expenses. But just because you use your horse twice a week for your business…doesn’t equal “I can expense his vet, feed and farrier bills as business costs”. These should be pro-rata for how much they contribute to your business or how much they contribute to your hobby (ie: horses).

Happy to help if you have other tax/income related questions!

Thank you so much for weighing in, my dad will be thrilled He just retired as a career dentist and has a healthy respect for what should constitute as a business expense and what should not and how to keep track. I wouldn’t fathom trying to write any of our existing expenses off. I do have an offhand question if you don’t mind! I am getting closer and closer to convincing myself I want to offer BEMER services which is a purchase I would expense. I would also plan on using it for Charlie as needed; how careful do I need to be about tracking what percentage of use is for personal vs business with something like that piece of equipment?

[Displaced_Yankee]

I have a soft spot for COTH tax questions…

It’s a difficult question since Charlie is some personal/some biz use. The BEMER is some personal/some biz use…but not at the same rate.

You need to decide: is it a business expense? Or is it a personal expense that helps the business? In the eyes of the IRS, you need to be able to justify your position, whatever it is.

In the start up stage…to stay on the conservative side… I would consider the BEMER as a personal expense. And then add the pro rata expense as “contributed capital” until you are using it over 50% for your business.

An example: BEMER cost / 5 years of use = expense per year. # days used per year (*on clients) / expense per year = deductible cost.

You may find a professional who can argue a different calculation… that’s fine. Just remember that YOU are responsible on signing off on your tax return, even if a professional prepares it.

[tabula_rashah]

I have an LLC- started out as an online nursery brokerage in 2016 and this year is becoming a brick and mortar wholesale nursery (I’m sitting in my Fiat as an office currently while my real office is being built lol). The most important things I have learned from having my own business and running other people’s - dot your i’s and cross your t’s and then double check them, keep an absolute paper trail with everything and, as painful as it is to your pocket, insure the heck out of your business. On a sort of opposite note, do not let it completely consume you, all of your time and all of your energy. For example, I have contractors who will call me at like 2AM with plant questions and I refuse to answer. I will also not answer work calls while I’m riding- things like that.

[FjordBCRF]

@Displaced_Yankee

I have a soft spot for COTH tax questions…

I very much appreciate you taking the time! Your comments did get my gears going more on the Charlie note. I would like to offer some form of on-site at our barn services for those that might be taking riding lessons but don’t own their own horse IF my BO has no issues with this. Say we do this 4 days out of the month; in that case, could I write of 4 days worth of board for the days he would be involved? As I understand it, I’d also be able to write off a portion of our normal expenses for having a home office, and milage driving to clients as well.

@tabula_rashah

On a sort of opposite note, do not let it completely consume you, all of your time and all of your energy.

I have a great appreciation for this advice and it is actively on my mind as I do have a 9-5 AND health issues of my own. The chronic health stuff pushed me to establish boundaries in my life a lot earlier than my peers did, so I thats in my wheel house. Balance is going to have to be key from the start. I’ve done a bunch of scenario planning; number of clients at different service rates etc, and it’s not going to take a ton of clients to max out the time I can make right now. with a full time job. Im ok with that and seeing how things go. If I get to a point that this could cover an appreciable amount of my bills outside of my horse expenses, I will have to think about my options. That is best case of course. As much as I would love to kick the corporate job to help people and their horses, and be in control of my own schedule, if it takes some time to get there…or never does…thats ok.

On the insurance bit. I just started thinking that seems to be something I want/need to do. Do you have any more specific recommendations on that topic?

[tabula_rashah]

@FjordBCRF

On the insurance bit. I just started thinking that seems to be something I want/need to do. Do you have any more specific recommendations on that topic?

I would say find an agent that understands the type of business you have and then find another one and price compare. For my type of business I have to get insurance certificates, etc quite often so having a great agent rather than going straight to a company is really helpful so I’m okay with paying more for the service but for what you are doing, it might not be that imperative. I’ve also learned that people really can sue you for absolutely anything. My brother’s business that I managed was sued for the following stupid things… for “letting” a drunk minor steal our truck and crash/total it, for a slip and fall at a convenience store on a day where it wasn’t snowing and we were not working there, oh and an ex-employee who only worked for us for a month watering plants where we use zero chemicals and claimed we gave him bladder cancer.

[FjordBCRF]

@tabula_rashah

My brother’s business that I managed was sued for the following stupid things… for “letting” a drunk minor steal our truck and crash/total it, for a slip and fall at a convenience store on a day where it wasn’t snowing and we were not working there, oh and an ex-employee who only worked for us for a month watering plants where we use zero chemicals and claimed we gave him bladder cancer.

From a quick goole, it looks like general small business insurance would cover the health coaching angle. I need to dig to see if that would over any horse related elements involved because Im sure that adds a whole different level of risk.

[Displaced_Yankee]

@FjordBCRF

Your comments did get my gears going more on the Charlie note. I would like to offer some form of on-site at our barn services for those that might be taking riding lessons but don’t own their own horse IF my BO has no issues with this. Say we do this 4 days out of the month; in that case, could I write of 4 days worth of board for the days he would be involved?

I mean…you could…but I think that is a risky position to take, honestly.

I think a safer bet (given the limited information you have given) is the get the market rate of 45 min- 1 hour lesson. Pick a discipline that most matches what you are doing: therapy, dressage, etc. and knock $10-$15 dollars off and that is your “cost” or “expense”. For example: a local kids therapy place offers lessons for $75. Minus $15 = $60 your cost of contributed time and horse (aka capital) and keep track of how many lessons you give.

It may actually work out to approximately 1 days board costs ($60 x 30 days = $1,800) depending on cost of living in your area. But in my opinion…it is a calculation that is easier to defend if ever questioned.

@FjordBCRF

As I understand it, I’d also be able to write off a portion of our normal expenses for having a home office, and milage driving to clients as well.

Home office: has to be a dedicated space (no spare bedroom/office). You can take a simplified method which is $5 x sq foot of office space (limited to 300 sq ft). You can do the more complicated calculation of mortgage interest/property taxes/utilities x % your office takes up of your entire home.

Mileage: with a qualifying home office (see above) business miles count from your home to your first appointment and any business trips from there (bank, post office). Without a qualifying office, your mileage to your first and from your last appointment do not count as business miles.

Hope this helps! Business ownership is complicated yet thrilling!

[FjordBCRF]

Thank you again!

I’m going to keep things as simple as I can I think. In the first couple years, if I get a handful of regular clients, I’m happy with that…and working my day job is already going to limit my time I can dedicate. At the end of the day for the foreseeable future, it’s a side business and my goal isn’t to write off everything little thing I could. I am surprised that that’s one of the first things I hear from people is “you can write all these things off!!!”. What makes the most sense to do and doesn’t create a bookkeeping nightmare and an even bigger nightmare to defend to the IRS, seems like the way to go to me. Keeping track of milage and expensing that I plan to do, but parsing everything else out by percentage I don’t think is warranted. Nor do I really want to keep track of!

No surprise, this is my dad’s approach too