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Business Classification, LLC, S-Corp, C-Corp, DBA

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Barrel Char Wood Products
D

ddclapp

NewBee
Registered Member
Dec 1, 2012
24
0
1
Massachusetts
Hi all,

Can anyone advise me, on the benefits to the different types of business classification for a Meadery?

I have gotten mixed recommendations from SCORE, my accountant, and others. In particular is there any reason to go one way or another specific to a winery or meadery.

1. DBA - Doing business As - I guess this is the same as a sole-proprietor, cheapest route, but can't add investors, have stocks.

2. LLC - this seems to be the most common in a quick survey of wineries in Massachusetts. It is a bit more expensive (500 annually).

3. S-Corp - maybe some tax advantages. You can get around being "double taxed" (taxed on income and dividends)

4. C-Corp seems most complecated, and you file seperate taxes. Seems more geared towards big businesses.

Any input would be appreciated, especially if it pertains to a winery (or meadery).

Dan
 
For a small business that you are the sole employee for you would most definitely want to go the sole proprietor route as this would allow you am advantage for tax savings. Also you would not need the added protection and complexity given through other classifications. However if you also have employees then that classification would not be for you


Sent from The Age of Legends, trapped inside a Stasis Box
 
Cooperative Extension, farm co-ops and the Small Business Administration may have additional resources. Cornell Cooperative Extension offers farm business courses online on occasion as well.

"Best" is whatever works for your personal comfort levels and wallet. You might also consider consulting with a lawyer. One of the considerations in selecting your business model is how safe are your personal assets (home, retirement, savings, etc.) in the event of a lawsuit. Sole proprietorship offers least protection, especially if you're casual about money flow.

The course I took was offered through the Northeast Beginning Farmers Project, which won't be offered again until next spring. But if you contact the course organizers, they might be able to point you to additional resources or courses. It's targeted toward farmers, but "farmer" encompassed a broad spectrum -- I took it when I started contemplating my honey and shiitake sales. The business information is still relevant.
 
I'd also imagine there would be a big difference between different states' requirements and limits as well. It's probably something that you couldn't do too much homework on, as it seems like a pretty daunting step for a lot of folks wanting to get into the brewing/meading business.

I can send you some contact info by PM later tonight. Making my mead/beer run to Tallahassee today to stock up on supplies! Gotta go...
 
BBBF said:
I wouldn't want to do "DBA" with anything involving alcohol. Someone could drink a bottle, crash their car and end up owning your house.
Click to expand...
Criminy, I hadn't even thought about that. (I was thinking more along the lines of someone stumbling in your brewery/bar and needing $5000 worth of dental work.) It's a damn shame that that's even a possibility. Sadly, I'm sure it happens. People shouldn't be able to sue for their own stupidity.
 
Possibly in Canada - however for most legal protection in the US - better to go with a single member LLC. You are taxed the same way with a schedule C on your 1040 return however have the legal protection of the LLC rather than completely exposing your personal assets that you would as a dba.

If you see the size of your business getting larger - an S corp is also a viable way to go. C - corps are for large multi-national business usually.
 
By the time you're done with all the licensing, bonding and paperwork, you're going to laugh that you were even worried about what type of corporation you needed. LOL Shelley gives great advice, do that! Also, check with both the Federal and State (capitalized because you're going to marry them) ATF websites. they will help.
 
Thanks all for the input. Shelly, good idea with the Facebook suggestion. I need to join the association anyways!

Just an update:

I met with SBA's SCORE advisers a couple of times. They keep saying that you get very limited additional protection being a corporation over a sole-proprietor. Just make sure you have good insurance policy with 1 million or so in coverage.

I met with a CPA, who after going through the varaious options, suggested a S-corp was the way to go, especially if I wan to bring in a limited number of partners. She thought the tax advantages where beneficial of C-Corp and LLC.

As Mannye has suggested, this determination has become secondary to all the other stuff I am doing regarding getting permits...
 
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