Basic Steps To Start Your Ice Cream Business – Part 2

by | Oct 20, 2016 | Ice Cream Consulting

Part 1 – Business Plan

Part 2 – Making It Legal 

Part 3 – Marketing Plan

You have a great idea and want to start a business so you find a location, make a respectable investment and ready to start selling. Wait is that it or is there more to it? Well I hate to break it to you, but yea there’s a few more details that need to be completed before opening the doors (notice I didn’t say consider doing it). Is the business legal and are you, the sole business owner protected from a number of possible risks. I’m not a legal advisor, but there are a few basic items that I believe need to be accomplished before selling your goodies. SCORE also agrees and have listed a few highlights from their presentation “Simple Steps for Starting Your Business”.

    • Choosing a legal structure
    • Understanding government rules and regulations for your type business
    • Purchasing business insurance

Decide The Legal Structure:

  • Sole Proprietorship, one person, you own the business. Plus side you make the decisions and pay a single tax. Minus side you are personally liable for any claims against the business.
  • Partnership, both partners manage and responsible for debt. Plus side the partnership does not pay taxes, partners report profit and loss on their personal tax return. Minus side partners are personally liable for any debts of the business.
  • “C” Corporation, a conventional incorporation that protects you from liability for the company’s debts or claims against it. Stocks can be sold to raise cash, however corporations are strictly regulated and taxed twice, the corporation pays income tax and shareholders pay tax on dividends.
  • “S” Corporation, protects owners against liability and offers more tax benefits that a corporation. The corporation does not pay federal income tax and profits and loss are reported on the shareholder’s individual tax return. Complying with regulations can be costly and time consuming.
  • “LLC” Limited Liability Company, offer liability protection like a corporation but without double taxation. Earnings and losses are reported on personal taxes and there are no limits to the number of members.

Government Regulations:

  • Business registration, licenses and zoning approval. All businesses need to be registered either in the state where they will be doing business or country of residence. Wherever registered, the company needs to supply a physical address, not a PO box. Registration fees are usually under $200 and there are annual fees.
  • Labor and immigration. If you hire employees you need to comply with state and federal labor laws regulating work hours, breaks, safety and other factors. There are also laws governing the hiring of immigrants.
  • IRS and Social Security withholding and payments. Even if you are the only person getting paid, you are considered an employee and responsible for making withholding payments including state, local and federal.

Insuring The Business:

  • Property, covers fire and other loss to buildings, contents, inventory, and home based businesses. Other options include business interruption.
  • Liability, covers bodily injury and property damage to others caused by accidents on your property.
  • Motor Vehicle, covered bodily injury and property damage resulting from the business use of your motor vehicle, such as a delivery truck.
  • Umbrella Liability, provides extra liability coverage above the limits in your basic automobile and general liability policy.
  • Worker’s Compensation, covers injury, death, and loss of wages to workers injured while on the job, including the owner and protects against employee lawsuits.
  • Health, speaks for itself, option to cover owners and employees with payment contributions established by the company.
  • Life, can be in place for a partnership in the event one of the partners dies. Also offered to the employee as a benefit.

The legal side of your business is not fun, but nevertheless very important to understand and look into. Darryl’s Ice Cream Solutions is not legal council, but has the experience to help you understand the requirements in order to get your business started.

Darryl David
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