pic: MVRE-109, high-recision shafted encoder

[AdamHeard]

Originally Posted by techhelpbb

Starting a limited liability company as a sole proprietor would allow the owner to declare liability limits for non-illegal or intentional negligence. Might be a good idea if you are selling something that involves kids engineering. I have done this several times in NJ...

In 24 hours you can: start a website, get a VoIP forwarded toll free number, setup a store online, register a business name at the county seat, get a UPS store mailbox you can address as a suite. In 1-2 weeks you can get a federal tax ID if you intend to hire employees beside yourself or if it actually turns out FIRST requires it. Be aware the ID makes it clear you will collect sales and use tax (be careful about use tax). You can usually get an ST3 for tax exempt resale in less than 2 weeks after this. Legally your SSN is adequate if you do not have employees (you are not scapegoating taxes, the income and risk is yours directly). You should also get business liability insurance and a business checking account (try a credit union) once you get your certificates from the state. Then you are legally a business. There is no law, just some zoning issues, which stop you from running a distribution and even light production business from a residential home. Just do not make toxic waste or anything illegal.

You are likely going to spend $750-$1,000 to start such a business. Assuming you don't pre-pay for the services being consumed initially (usually not the best idea). Then you will be looking at $250-$400 a month of operating costs (insurance $150, phone $20, website $10, mailbox $70). You may need an accountant to help you file the sales/use tax and the taxes and they will likely cost more money. On the plus side: consider that operating a business out of your home has certain tax advantages. You can write a portion of your home off for business use but it must be used mostly for that purpose. You can potentially write off vehicle use. You can write off a proportional amount of your electricity, cooling and heating costs for the business portion of the home. Expect that yearly costs of operation will be several thousand dollars.

Now the question is: will the product still be cheap if you do all of this?
The answer might be no, and in the case of this encoder, I would suggest finding additional markets outside of FIRST because even a single issue might put you underwater.

While a good idea for something larger, for the point Asid is it none of this is necessary other than understanding how a sole prop works and how to handle taxes properly.

No sense in incurring a bunch of expensive before necessary, he can always add on later.