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protecting yourself-sorry long post

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Hi everyone,

I am a newbie to candle making and for now I just give them as gifts but I can dream of selling them someday. I recently asked a ? on the board about trademarking and incorporating etc and got some great answers.Since then I have talked to a lawyer (friend)and a financial advisor(another friend) the lawyer said that inc. and trademarking would be a smart idea and the financial guy said that I do not need to incorporate and I should wait until I make some good $ to trademark.I would like to get some of your input please.My husband is worried that we could get sued if someone burns one of my candles and God forbid a fire would start in their home.So do you thing incorporating would help?Or just extra insurance and what kind of insurance? This is waaaay in the future but still would like info. Thanks:undecided :undecided

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Regardless of whether or not you incorporate or go with an LLC, I would strongly suggest you get insurance before selling anything. One good lawsuit, whether the complainant prevails or not, can ruin you financially. Never do business without insurance.

Also, if running your biz from your home, be careful, it is possible to lose your homeowners insurance when making and selling out of your home. Lots of HOI frown upon this practice. Some even frown upon just making candles in the home regardless of whether you are selling them. Check with your HO policy before proceeding with a home based biz.

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I'm still sole-proprietorship at this moment. I don't do near enough to warrant anything else yet. You need to look at the benefits of both incorporating and staying sole - both from financial and tax standpoint, then ask about your insurance standpoint. Some, not all, but some insurances only cover if you are one or the other.

Insurance is a MUST MUST MUST MUST MUST before selling anything or everything, regardless of your other business choices. At the least you'll need product liability. As Meredith pointed out, you can possibly lose your homeowner's, or not know you might if you started a business. You can get separate insurance for this and provide proof to your ho insurance or piggyback it.

Meredith gives priceless advice in lawsuits.

As for trademarking - it's not really essential to the start of a business - it's a high expense to start outright with as the fees along to TM are $480. That's just the fees, if you use a lawyer, it can easily double.

Once you sell your first item, and keep the document, you are somewhat protected already, AS LONG AS YOU KEEP THIS DOCUMENT. It has to include the date and item names and company names. Trademarking is good to have if you have the cash, but even if someone were to come and try to steal under your name, it is really just a buffer in the courts. They are going to want to know whether you've used it in trade, and if so, when. Those documents are more important than a piece of paper from the government.

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I have heard mention on this and other boards that incorporating will protect you from liability, but that is not necessarily true. There are instances where the corporate veil can be pierced and a person instead of a "corporation" held liable. Yes, incorporating is a good idea and it does make sense for many reasons, obviously I am not an accountant - but in order to protect yourself from liability, a sound insurance policy is the best protection, that and making safe candles!

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