Thinking about opening up a coin shop as I get closer to retiring. Any thoughts about the benefits of starting up an LLC now while still building inventory? Should allow for current storage in the home and in safety deposit boxes, publications, etc... If I wanted to hit a coin show as a dealer, then it would be doable to see if I enjoy it. Not to mention asset protection too. Side topic.. if anyone has opened a shop before, how much did you feel you needed between capital and inventory to start out? Thanks!
Yes there are benefits, but I am not an attorney. You can go to the local SBA (small business administration) and get some answers to the specifics. In my state it is $50 a year and a 7 place fill in the blank form.
I agree with Cloudsweeper. A lot of "collectors" and dealers don't make it over to this section. PM one of the mods.
Not sure how your state functions, but in my state you can LLC, without incorporating. It's the best of both worlds, because for federal taxes you can declare your choice of corporate taxes, self employed, or partnership (required if you are married and don't choose corp taxation). The biggest benefit of getting your LLC now is that you can claim all your expenses now as business expense. If you spend a bunch of personal money now gaining inventory and such, it will be harder to take those expenses 100% as business expense later. Also, you should be able to deal more readily with wholesalers being able to prove you are a business.
Personally I'd love to be a dealer, however, I know that I would be like a junkie trying to deal drugs... It don't work!
I go to the CPA that handles my taxes with these type of questions. He tells me when to bring in the lawyer.
If you don't do anything, you're a sole proprietor. If you're wondering about the advantages and disadvantages associated with changing that to a different form of business organization, you need to consult a doctor...I mean, lawyer.
As stated, go talk to an accountant. Everybody's situation is different and there is no one solution that works for everybody.
I am not a lawyer, but a CPA with some experience in this stuff. Overall, nothing much changes if you incorporate. Too many people get confused about this. You can always claim business expenses and the like as a sole proprietor. The only advantage a corporation gives you is limited liability if you get sued. Basically the corporation is the "person", so it owns the business, not you. If the business gets sued then the corporation can lose all its money, but not you personally. Even that for a sole proprietorship is not perfect, since you will be the emplyee who dealt with things, so they can try to sue you personally as well. You will be claiming subchapter S to minimize taxes, I won't get into that here. I find incorporation for sole proprietors oversold really. Yes, it can also save you some headahces for some tax forms as well, but it is also creating more work filing taxes. Bottom line you can feel free to start your business, buy inventory, and deduct expenses all without worrying about incorporation if you wish. Incorporation does not "make you a business", it is simply a legal device to create a different legal person to own a business. Chris
I think that depends on where you live. If you're in a smaller community, you might not need a large inventory to get started. But, if you're in the city I'd say you will need at least half a million in order to be competitive enough to stay afloat. When a friend of mine opened their shop they started out with over a million in just inventory, yet it wasn't enough to keep them open for long in a city with many other coin shops. Just some observations. Guy
