I am starting a bakery under the cottage food law, and I’m uncertain about whether to set up an LLC and get insurance at this early stage of the business. I’m not looking to avoid these steps, but I’m worried about committing to a business name if it doesn’t succeed. I want to make sure I’m approaching this correctly. Any advice?
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When starting my cottage bakery, I’ve been considering whether I need to form an LLC, and it turns out that while it’s not strictly required, it’s definitely a smart move. An LLC, or Limited Liability Company, helps protect my personal assets from any business liabilities, which is important in the food industry where someone could potentially get sick from my products. This protection gives me peace of mind as I grow my business. Additionally, having an LLC can simplify my taxes and make it easier to open a business bank account, which is crucial for keeping my finances organized. While I could start as a sole proprietor, which is simpler and cheaper, the benefits of an LLC, especially as my business expands, make it a worthwhile consideration. It’s also essential to check my state’s cottage food laws, as they dictate what I can sell and any necessary permits or licenses I might need to operate legally.
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Both are recommended, in my opinion. Your private property needs to be safeguarded. I really, really suggest insurance, especially in a field where lawsuits are a common occurrence.
Although you might obtain the LLC online from a website like Legal Zoom, I advise you to consult a lawyer.
Better to get everything set up correctly from the beginning. It is also advisable to obtain a business credit card or bank account following the registration of your company.