# Selling tshirts without a tax id or business incorporation



## vegas75 (Mar 28, 2013)

Hello,

If this has already been asked, my apologies. I am in the process of starting a side biz printing garments. I am going to be doing plastisol transfers on my own, but for larger projects, I have a screen printer. The question is: I have not started the biz officially yet, no tax id, no biz license or incorporation. I have an order from a friend, a larger order. Can I have my screen printer print it for me and then I resell them to my friend, without the biz formation? State of IL.

Thanks in advance.


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## splathead (Dec 4, 2005)

Best to ask your attorney. Getting properly licensed is pretty quick. Some aspects can be done same day. Just get it done instead of waiting for answers if you can do without it.


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## Mtnview (Nov 5, 2009)

The government (state and federal) definitely doesn't like tax shirkers. Consult an attorney or accountant or both but I would set up a company and get a tax id. It isn't that expensive when compared to the feds or the state coming after you for tax evasion.


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## GordonM (May 21, 2012)

You don't need an attorney to know what you're asking to do is illegal. If you are selling to an end user, in the state of IL you must collect sales tax, or show a valid exemption. You must then remit that sales tax money to the state, or if the sale is exempted, provide proof why. This is what a tax ID is all about. 

Business licenses are specific to your local city or county, and you can sometimes conduct business without one. You need to ask the local authority; many have online sites that answer these kinds of questions. Incorporation is for your personal benefit, and is not a legal requirement.


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## Mtnview (Nov 5, 2009)

GordonM said:


> Incorporation is for your personal benefit...


Here is an example with you not being incorporated in any way and it doesn't matter whether you work out of your basement, garage or retail location. Sole proprietorship won't help you either in this example. Your friend (or anyone else) comes over to pick up their order. They slip on your porch or sidewalk or inside and hurt themselves. As a result they can't work for awhile (if your lucky and it isn't worse) or enjoy life for who knows how long. They decide to sue you for compensation but your homeowners insurance isn't enough. So you figure alright there goes my business belongings (screen printer, computers, file cabinets, etc since this happened in the course of doing business) in order to pay the settlement but you still can't get enough. Guess what? Since you aren't incorporated now they can come after your personal property and belongings.

Doing the LLC or Inc is a small price to pay for peace of mind. I think it cost us $250 back in 2000 for an LLC using our attorney. Legal Zoom wasn't around back then.


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## vegas75 (Mar 28, 2013)

Thank you all. Will be working with my attorney to get my EIN# next week and then submit for my S-corp.


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## GordonM (May 21, 2012)

An attorney for an EIN? You can apply online at irs.gov for nothing. It takes minutes and the paperwork is easy.

On LLCs shielding personal property in a home-based business: this is a common misconception. Though it varies by state, if a customer is injured on personal property the LLC may not protect your personal assets. The LLC is for business liability; injuries to customers in your own home may still be under personal liability, especially if the injury is the result of negligence (which most personal injury lawyers will attempt to show). You'd be better off getting a rider from your insurance company to cover customers coming to your home. Not all insurers offer it, but it doesn't hurt to ask.

I'm not saying don't incorporate, but to be well protected in this manner you need to conduct business at a commercial establishment where you have separate (and adequate) business liability insurance. A minimum of $1 million is not uncommon. Arm's length is important with any corporation. From here your LLC (or other corp) can provide additional protection.

The costs of the LLC goes beyond the initial filing. The expensive part is paying the franchise tax. In CA it's a minimum $800 a year.

The above is not legal advice.


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## binki (Jul 16, 2006)

You can do it as a hobby without any of that stuff. In California you also don't need it if you use your name as the company name. 

Before you go to all of the expense you might want to try the hobby route. Until you have a profit there is nothing to do except you cannot carry over expenses to a future tax year. 

If you really want to do the company route, write a business plan, form a C-Corp, get an accountant and attorney and go for it. At least you can start building corporate debt rather than personal debt!

By the way, we have both a C Corp and an LLC. The LLC is valuable when you are losing money because it takes your personal income down. Once you start making money it can be a disaster as you cannot stop the flow of profit to you. On the other hand a C-Corp can offer unlimited cash and non-cash benefits so you can stave off the profit for a very long time which you cannot do with any other entity. Plus one side benefit is your C-Corp is protected under the constitution where your other entities are not.


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