How to Determine the Legal Structure of Your Handmade Jewelry Business

Business Saturday: An interview with Diana Ptaszynski, bead artist and founder of her handmade bead and handmade jewelry business, (formerly) Suburban Girl Studio and now Diana Ptaszynski LLC

How to Determine the Legal Structure of Your Handmade Jewelry BusinessQ: How did you research the differences between an LLC (Limited Liability Company) versus a sole proprietorship or corporation?

A: My business partner and husband, Colin Mellars, and I started by reading lots of books and the Internet. Once we determined a direction, we spoke with a corporate attorney who directed us to LegalZoom.com to do the paperwork required for an LLC.

Q: What made you ultimately decide to form an LLC for your business?

A: With a sole proprietorship, your personal assets are intermingled with your business assets. By forming an LLC, I’m able to protect my personal assets. In the event that an accident or incident occurs, my personal assets will be protected. Even though a sole proprietorship is less expensive when starting out, the protection offered by an LLC was worth the extra cost.

How to Determine the Legal Structure of Your Handmade Jewelry BusinessQ: What are the steps to forming an LLC?

A: We used LegalZoom.com for all of the necessary paperwork. We filed for an employer ID number with the IRS, registered the business in the primary state where the business is located, and then registered for sales tax IDs in the states where we are going to vend shows. Each state’s process can be different, so having an attorney and accountant was beneficial.

Q: How have you seen this choice positively affect your business?

A: From a customer perspective, I don’t think it has made a difference. However, I find the business is perceived in a more credible light when dealing in business-to-business transactions, for example, with insurance companies.
How to Determine the Legal Structure of Your Handmade Jewelry Business

Q: What advice would you give to someone going through this process?

A: If you are looking to form an LLC, get a lawyer and an accountant you trust. Also, make certain you have sufficient start-up capital for the business. This way your business and personal finances stay separate. Another important step is getting proper insurance coverage for your business. Small business insurance is necessary to cover any potential issues or accidents. Also, when going from a hobbyist to a full-fledged business owner, make sure you are diligent with your paperwork and record keeping. Keeping your books properly balanced is a must.­


For even more great tips on setting up your jewelry or craft business, check out these on-demand web seminars:

 

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