Need Advice on Trade marking and corporation, LLC, Ect

Discussion in 'Starting a Business' started by freebliss, Feb 22, 2011.

  1. freebliss

    freebliss
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    I have a product its pretty competitive but i believe i can make money with it. Its cheap to make and makes a good amount of profit.

    I really need help with choosing between just a DBA doing a corporation or a LLC. I for sure need to secure a name for the product, its very important. So i need to find out how i can search to see if my ideas are taken. I have a very small budget so I'm hoping this legal stuff doesn't cost me alot.

    The beauty of it is i can actually sell it before i secure a name, But if i want to put it in retail shops or set up a website and affiliate program like I want I will need to be legal and have a good name so I can make labels.
     
  2. Fergal

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    Welcome to our Business Forum freebliss, what city or state is your business based in?
     
  3. ArcSine

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    Freebliss, in most cases involving simple ownership structures (e.g., you are the sole owner of the business, or you have a small number of partners) there would be minimal differences--from a tax perspective--between operating as an LLC vs. operating as a corporation. This assumes that if you set it up as a corporation, you make the election with the IRS to be taxed as an "S Corporation".

    Both LLCs and corporations are administered by the individual states. Every state has its own "corporations" department, usually under the umbrella of the Secretary of State. Go to the Sec of State website for your particular state, and you'll find basic information on corporations and LLCs in your state. There are frequently differences in the fees for each....there is usually an initial 'setup' fee, and then an annual fee while the corp or LLC remains in existence. In my state, for example, both the setup fee and the annual fee are significantly less for a corporation than for an LLC.

    So since LLCs and S Corps provide similar liability protection for their owners, and also provide similar tax consequences, your decision may hinge on the state fees to set up and maintain.

    Congrats on your new venture, and best of luck with it!
     
  4. freebliss

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    Im located in rockford il. The sales will be offline to begin with. There are good opertunitys in my local area and anywere else. But before I try and do that the brand name has to be registerd or whatever.

    See im not sure if i need to register as DBA or get a Trade mark or some thing idk.

    This product has touchy legality issues with it. I dont really want to say what it is. So i know no one can help me there. Its nothin illegal its just somthing were you want to make sure you do things right. That cost money.

    So I was thinking about trying to get a small investor. Maybe thats why i need to look into corporation.
     
  5. ArcSine

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    If you're going to incorporate in IL, see here for the Sec of State info on LLCs and corps.

    Of course, saying, "This product has touchy legality issues with it" translates to "Yes, I will be renting an attorney's advice on this one..." This is in no way a commentary on the legality of the product; it's just a fact of today's complex life that very few biz ventures can be launched without at least a little input from a legal pro.

    On that point, DBA, trademarking, patenting, and/or other protection and licensing questions are usually best fielded by an attorney.

    If you're contemplating bringing some investor money to the game, you might wanna consider setting up as an LLC. Structuring as a corporation leads to two sub-choices: You'll either be a "C" corporation, or an "S" corporation, for tax purposes. A C-type has certain tax disadvantages relative to an S-type, but OTOH an S Corp isn't allowed as flexible a capital structure as a C Corp, making it disadvantageous if you want a multi-shareholder arrangement (founder vs. investor, say), each with different shareholder rights.

    An LLC gives you the tax advantages of an S Corp, along with the equity-structure flexibility of a C Corp--which as I say might be valuable depending on how you want to structure the relationship between your investor and your company.
     
  6. freebliss

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    Thank You for every ones replies. I figured I would be better with a lawyer but that's very expensive. I was hoping maybe i could figure it out without a lawyer.

    The whole structure stuff is confusion me. All i know is Id like a investor for lets say 10,000 but im not sure what to give in return either a % or i dont know. And if its a % i wouldn't want to give to high then whats fair. I think i would need an investor if i plan to rent a laywer.

    Thansk alot ArcSine for the link. it seems like for $10 I can register a trademark secure my brand name right? But on the form I have to pick LLC, corporation, individual ECT
     
    #6 freebliss, Feb 22, 2011
    Last edited: Feb 22, 2011
  7. Fergal

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    freebliss I'm not sure what it's like in Rockford, but here in Ireland many lawyers and accountants will give you a first consultation free of charge. If that's something you can avail of, it would be well worth putting together a list of questions and meeting one or two of each (accountant and lawyer). The initial consultation will help clarify a lot of issues for you and also inform you as to how much it would cost to continue using their services. If you find good people to work with, the money they save you will easily cover their fees.

    Good luck with your new venture.
     
  8. ArcSine

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    Bad news; good news...

    If you must go the DIY route, the issues you just mentioned are precisely the questions--among others--to which you must have crisp answers before pitching your idea over martinis to a potential investor. That means you've got some homework to do.

    Get hold of a simple business plan; the small-business / entrepreneur section of a library or at your local Barnes & Noble will have plenty of books on biz-plan writing. I'm sure you could also Google up a bunch of free examples off the 'net...e.g., here and here.

    I'm not saying you necessarily need to draft a formal biz plan to the extent of the examples you'll see. Rather, they should give you ideas about the questions you need to anticipate, and answer, before launching your venture. One of the first ones--one to which you alluded above--is a carefully-considered plan of just how much capital you'll need. Second, you need to create some projections of what kind of cash flows you think the venture will generate (usually under various assumptions, such as total sales under "worst case", "most likely", and "optimistic" scenarios).

    With those two issues thoroughly explored, you'll then be able to approach an investor with (1) a clear statement of how much capital you'll need; and (2) a proposal (determined by the expected cash flows) for how and when Investor will get back its capital along with an attractive return.

    It's very difficult to even get 30 seconds of an investor's time until you first have on paper at least a simple biz plan, including an estimation of your capital requirements, and some cash flow projections showing how the investor gets paid out.

    The good news is that everything I've said tends to be--to an extent--more or less true depending on how much capital you need. If you need $1 million you've gotta do everything by the book, including a polished and professional biz plan. At the other end, if you just need 10K, you might be able to circumvent much of what I've said and just get some friends and/or family members to pony up. Obviously in the latter case your arrangement can be pretty loose and informal (although not to the point of creating bad blood down the road over some misunderanding, natch).

    On the structuring issue (C corp, S corp, LLC) most any accountant with a little tax experience can guide you there. For the sake of cost-efficiency, though, you should first have at least a simple, bare-bones biz plan sketched out before talking to the accountant. To give you the best advice tailored to your situation, the accountant will start with some questions to you, that will give him / her a better picture of what you need. If your answers tend to start with, "Well, I hadn't really thought about that yet..." your session in his / her office will be three times longer than need be. And since they charge by the hour....;)

    Again, best of luck with it!
     
  9. freebliss

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    Thanks alot man! Hey i forgot to mention my step mothers father owns a tax office my dads manager and shes accountant. So i guess i need to ask my dad for some advice.

    I can for sure find out exactly almost to the T how much capital I will need. I actauly enjoy doing that kind of math even though i hated math in school. I already got 1K saved Im pretty good at saving money even though i dont make alot. I think a few grand can go along way with this. I have idea for a pitch im just gonna break it down about how little risk there is and how big the return.

    Does any one know a good cheap way to make lables? I can use photoshop and make my own logos. If you know a good cheap company or a product i can print my self.
     
    #9 freebliss, Feb 22, 2011
    Last edited: Feb 22, 2011
  10. Fergal

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    Are you just looking for a small quantity of labels for your own use, if so you could use Microsoft Word to create them? Or do you have more substantial requirements?
     
  11. freebliss

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    I think im going to look into something cheap i can print my self. This will be for my first sales. Im looking into better quality packaging and trying to see how much it cost.

    I can get very professional packaging for 14 cents a piece but they want to sell me 5000 for $725 so that's something medium scale but at 14c a piece its really a good deal. Add very nice labeling to that and im think thats another 14c per piece. So thats 28 cents per piece. After everything is bought the end piece could cost around 60-80 cents per piece and sell for $5 per piece for me and another $5 retail profit. So in the store it could cost $10 and I make $5 but im still thinking about that.
     
  12. Fergal

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    That sounds like a great mark up freebliss and I hope you can achieve it. Please do keep us up to date with your progress and let us know if you have any further questions or would like feedback and suggestions on something.
     

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