Candle Company Concern
April 10, 2018 10:39 AM Subscribe
My daughter and I want to make and sell candles. I think doing this correctly involves using a LLC and some form of insurance. I am not a lawyer, insurance agent, or accountant and want to do this the right way. How do I ensure I don't put consumers or myself at risk in this modest endeavor?
My wife currently has a LLC in Texas ( Let's call it Acme LLC ). It's for a book keeping business. We already have Tax IDs, credit cards, bank accounts, and an accountant in place.
I asked some lawyers I work with about my new found interest in a candle side hustle ( Let's call it Jason's Candles ). Here is what I understand to be true if I am to do this correctly and protect ( as best as I can ) my customers and my personal and corporate assets:
1) I should operate my candle company under the Acme LLC using a DBA filing for Jason's Candles to the Texas Secretary of State and country clerk in which I operate ( Travis County ).
2) Any and all financial transactions should go through the accounts / IDs setup for Acme LLC
3) Any and all marketing / branding can use Jason's Candles and does not need to reference Acme Co. That's the purpose of the DBA filing.
4) If I am out hustling candles in farmers markets, street corners, etc. I am an implied agent of Jason's Candles and therefore Acme Co.
5) Every candle I sell should have a warning label.
6) I should document on my website, my candle making process and demonstrate the due care I take in making my candles, e.g. Not overloading fragrances which can cause fires, doing thorough burn testing, etc.
7) I should document on my website proper candle safety procedures, e.g. Don't burn more than 3 hours, trim your wick, rest on a flat surface.
8) I should purchase general liability / product liability insurance for the LLC and ensure that the candle making / candle business is covered. A smart ( or maybe dumb ) person may argue that the cost for that coverage may be more than the assets of the company and would therefore not make financial sense. There may be other reasons why this insurance should be in place. Are there?
9) It is going to be very hard for someone to successfully sue me if I have taken steps 1-8 and prove that they indeed followed proper candle burning guidelines. If they did, the insurance would cover damages, and anything over that, would at worst bankrupt Jason's Candles and the $250.57 in assets.
10) After taking the above steps, if someone were to successfully make the case that I have been personally negligent or have pierced the corporate veil, I should ensure I have a personal umbrella policy ( which I already do ) to protect my personal assets.
11) Let my current home owners insurance agent know I am making candles in my kitchen / garage and adjust my policy accordingly. I am not sure if I need to do this.
12) Don't burn my own house down in making candles.
YANML! But......does all that sound about right? Are there other controls I need to put in place? Ultimately I would like to sleep at night but also conduct business properly and manage risk accordingly even if I only sell 1 candle. This is basically a hobby at this point and I don't really want / think I need to go hire a lawyer here but if you say I do, I will consider it.
My wife currently has a LLC in Texas ( Let's call it Acme LLC ). It's for a book keeping business. We already have Tax IDs, credit cards, bank accounts, and an accountant in place.
I asked some lawyers I work with about my new found interest in a candle side hustle ( Let's call it Jason's Candles ). Here is what I understand to be true if I am to do this correctly and protect ( as best as I can ) my customers and my personal and corporate assets:
1) I should operate my candle company under the Acme LLC using a DBA filing for Jason's Candles to the Texas Secretary of State and country clerk in which I operate ( Travis County ).
2) Any and all financial transactions should go through the accounts / IDs setup for Acme LLC
3) Any and all marketing / branding can use Jason's Candles and does not need to reference Acme Co. That's the purpose of the DBA filing.
4) If I am out hustling candles in farmers markets, street corners, etc. I am an implied agent of Jason's Candles and therefore Acme Co.
5) Every candle I sell should have a warning label.
6) I should document on my website, my candle making process and demonstrate the due care I take in making my candles, e.g. Not overloading fragrances which can cause fires, doing thorough burn testing, etc.
7) I should document on my website proper candle safety procedures, e.g. Don't burn more than 3 hours, trim your wick, rest on a flat surface.
8) I should purchase general liability / product liability insurance for the LLC and ensure that the candle making / candle business is covered. A smart ( or maybe dumb ) person may argue that the cost for that coverage may be more than the assets of the company and would therefore not make financial sense. There may be other reasons why this insurance should be in place. Are there?
9) It is going to be very hard for someone to successfully sue me if I have taken steps 1-8 and prove that they indeed followed proper candle burning guidelines. If they did, the insurance would cover damages, and anything over that, would at worst bankrupt Jason's Candles and the $250.57 in assets.
10) After taking the above steps, if someone were to successfully make the case that I have been personally negligent or have pierced the corporate veil, I should ensure I have a personal umbrella policy ( which I already do ) to protect my personal assets.
11) Let my current home owners insurance agent know I am making candles in my kitchen / garage and adjust my policy accordingly. I am not sure if I need to do this.
12) Don't burn my own house down in making candles.
YANML! But......does all that sound about right? Are there other controls I need to put in place? Ultimately I would like to sleep at night but also conduct business properly and manage risk accordingly even if I only sell 1 candle. This is basically a hobby at this point and I don't really want / think I need to go hire a lawyer here but if you say I do, I will consider it.
I think you should let your NINE year old daughter play with candlemaking for a while since she's interested, and if she has some that she wants to actually sell (she may feel attached to them, lots of kids don't like to give up the things that they make, even for money), pop them on etsy. IF those sell and IF your NINE YEAR OLD kid is still interested in making candles a month from now, then you can go on to do all this other stuff.
I was an extremely creative and entrepreneurial kid, far beyond all of my peers growing up, and this level of involvement from my parents and this number of rules would have absolutely killed all fun and joy out of the activity for me.
I really and truly think that at this point you're severely overthinking things. Just start making stuff! She's nine, she wants to do things with her dad, go have some FUN for hecks sake.
posted by phunniemee at 11:10 AM on April 10, 2018 [24 favorites]
I was an extremely creative and entrepreneurial kid, far beyond all of my peers growing up, and this level of involvement from my parents and this number of rules would have absolutely killed all fun and joy out of the activity for me.
I really and truly think that at this point you're severely overthinking things. Just start making stuff! She's nine, she wants to do things with her dad, go have some FUN for hecks sake.
posted by phunniemee at 11:10 AM on April 10, 2018 [24 favorites]
If Jason's Candles is operating as a DBA of Acme, then a suit against Jason's Candles would reach to Acme's assets. It sounds as if Acme is a real company with real assets of its own, not just a shell, so that doesn't seem too desirable. To insulate (generally) Acme from liability, you would need to make Jason's Candles a subsidiary of Acme, not a DBA.
posted by praemunire at 11:10 AM on April 10, 2018 [2 favorites]
posted by praemunire at 11:10 AM on April 10, 2018 [2 favorites]
(If you're operating a business out of your home, yes, your insurer generally wants to know.)
posted by praemunire at 11:11 AM on April 10, 2018
posted by praemunire at 11:11 AM on April 10, 2018
Response by poster: I should have prefaced my question with this: I would like to figure out how to do this whether my daughter sells one candle to her best friend or sells a millions on etsy. The risk still exists in either situation and I would rather do this properly than assume the risk doesn't exist until we make our 1,001 candle. The question should standalone from any concern or questions about my parenting / mentoring skills.
Stepping back from the creative side of this is perfectly understood. Stepping forward and doing this the right way and protecting my daughter's livelihood ( my house and $$$ ) is the right thing to do from a legal perspective.
posted by jasondigitized at 11:33 AM on April 10, 2018 [1 favorite]
Stepping back from the creative side of this is perfectly understood. Stepping forward and doing this the right way and protecting my daughter's livelihood ( my house and $$$ ) is the right thing to do from a legal perspective.
posted by jasondigitized at 11:33 AM on April 10, 2018 [1 favorite]
Best answer: Stepping forward and doing this the right way and protecting my daughter's livelihood ( my house and $$$ ) is the right thing to do from a legal perspective.
Call your insurer and tell them you're starting a small home crafting business, and ask about adding a product liability rider to your homeowner's/renter's policy.
posted by phunniemee at 11:43 AM on April 10, 2018 [2 favorites]
Call your insurer and tell them you're starting a small home crafting business, and ask about adding a product liability rider to your homeowner's/renter's policy.
posted by phunniemee at 11:43 AM on April 10, 2018 [2 favorites]
Best answer: Given your liability concerns, don't involve your wife's established LLC. In Texas, it's $300 to register a new one, and filing for a state tax ID is free. You can use the same accountant for this separate business. Also, note the criteria for a sales tax permit. There may be additional applicable business filings for the state as well as and for your county and city.
posted by Iris Gambol at 11:56 AM on April 10, 2018
posted by Iris Gambol at 11:56 AM on April 10, 2018
Well, "selling one candle to her best friend" or "millions on etsy" are different things and for good reason. For a small-scale hobby which occasionally makes a little money on the side you probably don't need permitting at all. And for a larger business, well, there's a lot more to it than just liability control. big business is hard, and there are plenty of people who learned the hard way that doing anything as a business involves more than just doing the same hobby, only bigger. Lots of people passionate about, say cooking or dying yarn find themselves in over their heads because a business is a completely different and kinda time-consuming thing to get into and uses skills completely orthogonal to the actual craft.
posted by jackbishop at 3:56 PM on April 10, 2018 [3 favorites]
posted by jackbishop at 3:56 PM on April 10, 2018 [3 favorites]
I'm just concerned that you're calling her idea to do something crafty her livelihood and also alluding to her 1001th and millionth sold candles. I mean, she's a kid with an idea. Help her with initial supply ordering, ensure she is safe when working with hot wax, and let her do her thing.
Give her a chance to make the thing, figure out how to sell the thing, and decide if she wants to continue with this thing before you step in. A supervised 9 yo making candles is not going to put you or your home at risk--she's a kid with a hobby. You've gone from her crafty idea to her business model--stop doing that.
posted by yes I said yes I will Yes at 3:01 AM on April 11, 2018 [1 favorite]
Give her a chance to make the thing, figure out how to sell the thing, and decide if she wants to continue with this thing before you step in. A supervised 9 yo making candles is not going to put you or your home at risk--she's a kid with a hobby. You've gone from her crafty idea to her business model--stop doing that.
posted by yes I said yes I will Yes at 3:01 AM on April 11, 2018 [1 favorite]
Wait a minute the kid is nine ??? Your post is written like you two are going into business together ! This is the definition of helicopter parenting. Get her a candle making kit and take several steps back until you get some perspective on this.
posted by pintapicasso at 10:12 AM on April 11, 2018 [3 favorites]
posted by pintapicasso at 10:12 AM on April 11, 2018 [3 favorites]
Response by poster: Geez guys. The question is about business risk, not parenting or my daughter. If I wanted advice on that,I would have asked for it. I should have said I was starting a firecracker business in my garage and someone would have given me a good answer to the question. The question is about tort law and risk. But I will play along...........
She makes a candle. She gives it to a friend. It's a flammable device!!!! They burn it. It explodes. I get sued. I lose my house. My daughter's livelihood is put at risk. How do I prevent that from happening. That is the question.
Please don't turn it into anything about my parenting ability. You're smarter than that. If you disagree with me letting my son use a gas stove and knives at age 7, leave it to yourself.
posted by jasondigitized at 10:57 AM on April 11, 2018
She makes a candle. She gives it to a friend. It's a flammable device!!!! They burn it. It explodes. I get sued. I lose my house. My daughter's livelihood is put at risk. How do I prevent that from happening. That is the question.
Please don't turn it into anything about my parenting ability. You're smarter than that. If you disagree with me letting my son use a gas stove and knives at age 7, leave it to yourself.
posted by jasondigitized at 10:57 AM on April 11, 2018
"She makes a candle. She gives it to a friend. It's a flammable device!!!! They burn it. It explodes. I get sued. I lose my house. My daughter's livelihood is put at risk. How do I prevent that from happening. That is the question. "
The basis of the question is excessively paranoid and unrealistic which is why i think you are having trouble getting answers. Just call a lawyer and ask them, but make sure you mention your current volume estimate is to sell a handful of candles to friends. Maybe you will believe a lawyer saying, "Dude...what?"
posted by WeekendJen at 11:32 AM on April 11, 2018 [6 favorites]
The basis of the question is excessively paranoid and unrealistic which is why i think you are having trouble getting answers. Just call a lawyer and ask them, but make sure you mention your current volume estimate is to sell a handful of candles to friends. Maybe you will believe a lawyer saying, "Dude...what?"
posted by WeekendJen at 11:32 AM on April 11, 2018 [6 favorites]
Mod note: Folks, the parenting side has been thoroughly discussed. Please stick to the actual question.
posted by restless_nomad (staff) at 3:19 PM on April 11, 2018
posted by restless_nomad (staff) at 3:19 PM on April 11, 2018
« Older Webinar/meeting software: Zoom instead of... | Recommend me some Spanish podcasts I'll enjoy! Newer »
This thread is closed to new comments.
Other answer:only a lawyer can answer this for you.
posted by yes I said yes I will Yes at 11:09 AM on April 10, 2018 [6 favorites]