Where to start??

Discussion in 'Starting a Business' started by Brattypony, Jul 5, 2011.

  1. Brattypony

    Brattypony
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    Hello,
    I'll start by saying thank you to all those who donate their time to give advice on these forums.

    For Years I have donated my time, money and animals for many activities (lessons, petting zoo's, parties, visiting Nursing homes, Handicapped schools, educational events, clinics, etc.) I have always done this on a volunteer basis but I now get too many requests to be able to financially justify doing all this for free. If I could accept donations or charge a fee to pay for my expenses I would continue and be able to do so many more activities.
    I'm not looking at a business as a way to get rich but as a way to put smiles on many faces, maybe physically and/or mentally help a few, and to bring a better understanding of animals to others. I have highly trained and special animals I use for these activities which mainly consist of miniature horses depending on what type of activity.
    My goal would be for the activities to pay for themselves and to maybe help with the up keep and care of the animals used for the services.
    We are preparing to buy a home with more land and building a new barn that would make things much easier to do than my current set up.
    I just don't know where to start? So confusing? I've researched Non-profit, and LLC. to some extent but I don't know which would be the thing to do if anything.
    How do Big farms get to claim tax exempt of their feeds and such?
    I really want to continue with our service but I need to find out what I have to do to be able to charge a fee or request a donation. Both of my children will be in school full time and I will have more time to dedicate to providing these services. I also feel I have the knowledge to keep the books on this type of Business.
    I need some unbiased opinions on what would be the best and least expensive way to do this. Here in Ohio there are a few things that I've learned 1 is we have a equine participation law :) and that it is only $125 to apply for a llc. But I didn't find any figures for non-profit or a time line for either. Will this take years to apply for?
    Thank you for any advice you can share :)
     
  2. ArcSine

    ArcSine
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    It's a pleasure to hear from you, Brattypony, and the plans you've described are most admirable. I certainly wish you every success with it!

    With respect to your questions, I'd strongly encourage you to seek the advice of an accountant who (1) practices in Ohio, and (2) has experience with non-profit organizations. When you "phone shop" some local accountants, be sure that one of your questions is an inquiry as to how many non-prof clients they serve. You'll almost certainly hit upon one or two who have a decent-sized non-profit clientele. It's usually the case that, by word of mouth, non-profit orgs tend to gravitate toward certain accountants, so that such accountants develop something of a specialty in this area. It's that specialization that'll serve you well.

    If you do indeed move forward with your plans, it'll be important that everything is done properly, from the standpoint of tax filings and other regulatory matters, in order to preserve your tax-exempt status. An accountant with expertise in this area will keep that end of things running smoothly, thus allowing you to stay focused on your activity.

    Also, as a valid operating expense, the accountant's fees can be included among the expenses you're allowed to recoup tax-free from the donations and/or fees you charge.

    Consider too that you'll need to file not only a federal tax report, but an Ohio one as well---hence the desirability of having an advisor who's well-versed in the Ohio non-prof and tax-exempt regulations.

    I'm not aware of any extensive "waiting time" for setting up non-profs. It's just a matter of forming your LLC or corporation (which is nearly instantaneous---file the reports online and pay the fee), and in your formation report you'll indicate that you intend to operate as a non-profit.

    Also be aware that there are actually two different types of what I've loosely referred to as "tax exempts" and "non-profits". A "qualifying organization" is one for which the contributions are deductible by the donor. A "non profit", on the other hand, is one which is allowed to collect fees or revenues without paying income tax thereon, so long as the revenues are primarily to cover the operating expenses, without leaving a large excess profit that benefits some private party. Typically, though, donations to a non-profit are not deductible by the donor unless the donee-entity is also a "qualifying organization". Your advisor can help you decide which path to pursue.

    Again, my commendations to you, and I wish you the best in your plans.
     
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  3. Brattypony

    Brattypony
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    Thank you so much for your reply.
    I orignally started making phone calls to Accountants in the area and the next city over and honestly recieved no helpful info. if anything I was disscouraged before they even listened to my question. I will try again today to call a few that I haven't already called. There was only 1 that I called a couple months ago who would consider talking to me and he wanted $75 and hour. The rest want Big farmers and breeders if it is agriculter related.
    I feel that they aren't taking me serious, because it is not a get rich quick or scam of anytype and I don't want to be a BREEDER. It is an actual business which has been active for years just always as a free service with all the liability on me personally. I have so many request that I have to move fwd. with this in some way.
    When I have talked to the local county office about it they say there is nothing I can do other than list as and become a breeder. Whoever put that law in effect is nuts. Why would I want to breed my animals when the market is already flooded with good animals who need homes. I get soo frustrated. I'm trying firgure out how to legally continue and expand these services the correct way and I'm gettting NO help from the local officials.
    So I have turned to the wonderful web :)
    Thank you for your help, I'll go try to make some calls again.
    Have a good day:)
     
  4. ArcSine

    ArcSine
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    Couple of thoughts...

    Concentrate on the smaller accounting firms. Although it's true you want to stay within the rules and regs when running a not-for-profit, it's also true that the compliance issues ain't exactly rocket science. You don't need a large CPA firm for this. I know a CPA who runs a pretty small, one-office operation, but who also has a fair number of non-prof clients. So focus on the small accounting / bookkeeping operations.

    To tell the truth, though, that quote you mentioned probably came from the kind of small firm I'm referring to (hourly rates for the bigger firms are usually much higher). But there are two variables which together determine the total cost: The hourly rate, and the time the accountant will need to spend on your work each month (or quarter, or year). If you're running a fairly small, simple operation, that time part of the equation should be minimal, thereby keeping a lid on the fees.

    You may need to prepare a simple forecast in which you estimate what your fees / revenues, and your expenses, will be. Having done so, you can then gauge whether or not the net cash flow can support the accounting services.

    If you happen to know someone (cousin's brother-in-law, nephew, e.g.) who has a little accounting / bookkeeping experience or training---someone who also has an admirable allocation of common sense---perhaps you can enlist their help in doing some of this preliminary blueprinting, just as a favor.

    Re an earlier point I mentioned, are you intending to operate as a not-for-profit, or as a qualifying organization? (The latter has more red tape, but it permits your donors to deduct their contributions for tax purposes.)
     
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  5. Fergal

    Fergal
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    First off Brattypony welcome to our business forum and well done for having such an excellent project. From what you say it sounds like you do fantastic work and I'm sure it is extremely helpful to the people who come into contact with your animals.

    I'm not based in the US so unfortunately I don't have the expertise to answer your questions, however it might help to contact your local IRS office and ask them a few questions over the phone.

    I sincerely hope that it all works out for you.
     
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  6. Brattypony

    Brattypony
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    My biggest question is What to operate as? An LLC, a not-for -profit, INC., organization, company??? The least amount of red tape would of course be my choice but Whatever I do I'd like to do it right, the first time :)
    My mother has an associate CPA, and I have 3 years of accounting experience, so the book keeping is the least of my worries except I would want a certified CPA to prepare or review my taxes each year for my own peace of mind.
    The time of year to call cpa's with questions makes a huge difference, made a call to the 2 local CPA's who didn't want to give me a moment of thier time back in April, were quiet chatty today and willing to schedule appt. to talk, back in April (tax time) they might as well have hung up on me. Now my first impression of them is not the greatest but hopfully they can make a better impression in a consultation.

    What should I be looking into? A Not- for -profit, or an LLC, ect. Any tips or suggestions?
    Thank you.
     
  7. Brattypony

    Brattypony
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    Fergal ~ THank you! I have contacted my local GOV. agencies, and the reply I got was I should breed my animals and registar as a breeder, OH has some stupid law that encourages this, which really offends me. We already have an over population problem so many perfectly good animals in need of homes and ohio is encouraging more breeding, DUH~ no wonder there are so many puppy mills and poor or even Cruel breeding faciliaties! Now that I'm back on a roll with this project I will try to contact the Gov. at a state level, I know unfortunatly my County was no help and I have NO intentions to add to the overpopulation of pets/ animals (no blood money for me).
    Thanks again :)
     
  8. ArcSine

    ArcSine
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    I wish I'd known that your first round of calls was made in early April; as a former CPA myself, who's gritted out too many tax seasons, I could've told you what the results of those phone calls would be :). I'll bet the farm that at least some of these chaps will be much more personable this time around!

    Also, summer tends to be their slow time. They'll be much more receptive to landing a new client to help fill the down time, and that'll work in your favor when it comes to fee quotes.

    "LLC" and "not for profit" are not mutually exclusive alternatives. First you'll choose the best form of business entity to suit your needs, with such choices being LLC, corporation, partnership, or sole proprietorship. This is a decision for every business activity, whether for-profit or not.

    Next, you'll make the choice of "for profit", "not for profit", or "qualifying organization". Again, this is independent of which entity you've chosen in the previous paragraph.

    BOTH of these choices are very much dependent on the specifics of your situation and your plans.

    Very glad to hear about your and your mom's accounting experience. You should be left with needing just two things from an advisor: Guidance on the front end regarding those choices I just mentioned; and then a federal and state tax return after the end of each year.

    On a personal note, I can't speak highly enough about your stance on animal cruelty issues....keep up the great work!
     
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    #8 ArcSine, Jul 5, 2011
    Last edited: Jul 5, 2011
  9. Brattypony

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    The timing didn't even dawn on me till now(earlier today), but still they could have requested I call at a later date. Anyway, I'll give it another shot :) It can't be as complicated as it seems. I know I can do this if I just get pointed in the right direction with some confidence. Thank you!! :)
     

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