With an LLC you will need to be turning a profit within 7 years. It’s not just a way to write off board/feed/expenses for the horses forever (but wouldn’t that be nice!). Unless you’re worried about protecting your personal assets, I wouldn’t go through the hassle.
[QUOTE=skykingismybaby1;7730172]
Well today we received our reinstatement letter from the IRS! Five weeks from start to finish. I am duly impressed by the IRS. (it even rhymes)[/QUOTE]
Congratulations! 
These have all been great replies, thank you. I will narrow it down a little bit more for further clarification:
-I will be the only employee, doing all the riding, advertising, etc.
-I am only starting with one horse, and will only have one horse at a time after each one sells.
-Horse will be boarded.
The sole proprietorship sounds like it may be the best option. When you get a business loan, can you use any of that money for farrier, vet…etc? Thx.
Will depend on the lender and the terms you establish, but usually, yes you could use a loan for operating expenses.
Spend some time on the government’s Small Business Administration (SBA) website. Lots of good resources there, especially on the “Starting and Managing a Business” page. SBA has a “general” loan program that has pretty broad eligibility. But do take a look at the application requirements – you need to prepare a lot of supporting documentation that shows you are indeed a Business with a clear plan that they can get behind. This goes back to the recommendation of writing up a solid business plan. It’s a valuable exercise whether or not you need loans, and you will not get an unsecured business loan without one.
If you are just looking at starting with one horse I would not go through the effort to establish a business. Check the laws in your state but in most there is a minimum number of sales that will qualify you as a business. In VA I believe its 3 horses per year. Also, check the liability laws.
I hate to be Debby Downer but this OTTB flip scheme is booming in many areas already. The horses off the track which are sound enough to flip have prices increasing daily beyond what you would be able to recoup having to board the horse. Everyone seems to be trying to cash in on the new fad and very few are successful at it. Those finding success were doing it long before it became “cool” to do so and have the clientel and track trainer relationships well established. Most “flippers” are fully vetting horses prior to purchasing them which is an additional expense and most own their own properties. You will also need the funds to keep the horse long term if it doesnt sell, has an injury in your care, or an old injury that resurfaces. You would need a very creative business writer to get you an SBA loan for this type of venture and most grants that are available are only for non-profits.
As far as establishing a “rescue” that is being over done as well with new ones popping up all over. In the end its the horses who are suffering by not being accurately respresented somewhere along the line and “rescues” not having enough money to support a returned horse. There is definitely a reason why the long time rescues are still around, there is a lot more that goes into charity work than having 1 horse and boarding it. Also, for most of the TB grants out there you have to have a minimum number of horses and be in business with a 501c3 for at least 3 years.
I would suggest you speak to people in other areas who are successfully flipping TBs to get some ideas on where you can save and what unexpected expenditures they have found along the way.
[QUOTE=Woodsperson;7726598]
Specifically the IRS says to be tax-exempt under section 501©(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501©(3), and none of its earnings may inure to any private shareholder or individual. The exempt purposes set forth in section 501©(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.[/QUOTE]
Yes - this exactly. Reselling the horse is not an exempt purpose; rehab/rescue would possibly be an exempt purpose, and could potentially allow you to apply for 501c(3) in order to solicit tax-exempt donations.
However, people can still donate to you - they just can’t deduct it on their taxes.
Your local small business development organization (usually state funded, and may have regional offices) can help you start a business plan.
