# To sell or not to sell...



## Ugeauxgirl (Oct 22, 2021)

So I'd decided not to sell soap.  I just retired a year ago from a very stressful career and I wanted to enjoy my hobby as just a hobby.  I gave a lot of soap away, but now people are asking to buy it.  Quite a few people have said that it has improved their itchy skin, eczema, etc.  People have asked for wedding favors etc.  And my girlfriend who is a pediatrician asked for some to give to her eczema patients- along with a business card, which I don't have cause I don't sell soap.  Three friends have sent me a flier about a Christmas craft event at a local school- $30 for a table.

I don't think I want to market soap, but I'd like to sell my extras, and maybe a loaf here or there.  What is the absolute minimum I need to do this?  I'm in the US.  Insurance?  Can I just sell it DBA or do I need to form an LLC?  Do I want to do this?  Somebody talk me out of it!


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## AliOop (Oct 22, 2021)

If you spend any money at all on your soap "business," the best and first place is always insurance. That will give you far better protection than an LLC. 

Insurance will pay for the lawyer to defend you - an LLC doesn't do that. 

Insurance will also pay for any judgment against you - an LLC doesn't do that. 

Insurance costs are often lower than the initial incorporation and ongoing fees (tax returns, etc.) associated with an LLC.

For the full protection of an LLC, you must keep a separate bank account and scrupulous records to show that you aren't commingling personal assets with LLC assets. Any significant commingling will void the protection against a personal judgment. With insurance, it doesn't matter whether you commingle, have an LLC, don't have an LLC - it covers you.

Also, a good many folks simply don't have any assets that are subject to judgment. You have a homestead exemption for your house (unless you have equity over the homestead amount). At least one vehicle and all retirement savings are exempt from judgment. If you have significantly more than that, then perhaps an LLC is good for you... but insurance is almost always better.


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## Ugeauxgirl (Oct 22, 2021)

@AliOop -That helps.  Additional info- we DO have assets to protect and I don't particularly care if my hobby is profitable.  If it paid part of what I'm spending, I'd be happy with that.  If it covered my costs, I'd be thrilled.


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## AliOop (Oct 22, 2021)

If you do have assets, then definitely get insurance. Make sure it covers cost of defense, not just cost of judgment. There are some threads here about insurance for soapmaking that might be helpful to get you started with finding a place to buy it.


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## Catscankim (Oct 22, 2021)

gww said:


> I am not a lawyer


@AliOop is LOL


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## ScentimentallyYours (Oct 22, 2021)

Can those of us not in business have folks who want our soap by special request reimburse us for our expenses?  Would that solve @Ugeauxgirl’s dilemma?  (Mine too!)


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## lucycat (Oct 23, 2021)

You do need insurance and that will be the factor for you in selling.    I use HSCG  and membership and insurance was $450 this year for 1 million in liability.   If you only sell 450 bars of soap in a year then you have $1 cost per bar in insurance and you will need to consider that in your selling price.   You can see it is easy to manage insurance cost if you are selling 4500 bars a year where the cost would average .10 per bar,  but a lot harder if you sell a small number.   Figure out your costs of raw materials so you know what this is on a per bar basis. Then add in the insurance.   Then you can work on ideas of how many bars you want to sell and whether it can work.    You can quickly see that if you don't sell many bars the insurance can seem too expensive for you to sell at all.   Also, friends who have received soap for free may not have the same idea as you of an appropriate sales price.   

You don't have to have a LLC.  You can talk to a lawyer but liability if you are the person who makes your products and sells your products liability isn't always limited in an LLC.   If you sell as an individual proprietor you will just report your income on a schedule C on your tax return.   You will also need to learn about the requirements for sales tax in your state.   That is a pain but it isn't hard.  

How you sell and how much is really a personal decision.  You don't have to go in for a big business but you do need to be aware of the point at which the additional costs you have will be offset by the number of bars sold.  

There used to be another company that sold insurance if your sales were under $5000.  I don't remember the source or if it is still there.  If it is then the costs were low enough to try for a year or two and see if it works for you.


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## Catscankim (Oct 23, 2021)

I do not have assets (unless you consider my 2004 chevy colorado an asset....TAKE HER IF YOU MUST lol)

I used to not have insurance because I was selling small scale, like friends and such. Then I had one girl approach me one day that she "scratched the [heck] out of her arm from the shell on top of the soap". "Ummm..the shell is made of soap and what kind of special person physically injures themselves with soap." she assumed the shell was real and ran with it. Her husband confirmed that she did not hurt herself with the soap and in fact loved it. Sparing you most of the details ... Her arm had no scratches on it, and I shoved $8 down her shirt to return the money lol. I have so many words for this type of person. Not worth it.

ok I have to edit here...I have known this girl and her sister for 14 years...this wasn't a random customer that I had this encounter with LOL. I wouldn't shove money down a customers shirt if they weren't happy LOL

Anyway. That very day was the day that I decided to purchase insurance for my soap. And it opened up avenues for other selling, mostly small scale so far because that is all I have time for. But at least I have peace of mind that nobody is going to make a claim on my colorado LOL.

Hiscox is what I have. They let you put a small down payment and pay monthly installments.


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## TheGecko (Oct 23, 2021)

Ugeauxgirl said:


> I don't think I want to market soap, but I'd like to sell my extras, and maybe a loaf here or there. What is the absolute minimum I need to do this? I'm in the US. Insurance? Can I just sell it DBA or do I need to form an LLC? Do I want to do this? Somebody talk me out of it!



You'll want insurance to protect yourself. Registering as a DBA will allow you to open a separate bank account, but won't protect your personal assets as much as being a single-member LLC will (I can help you with that) and it's not that expensive.

You'll also need to check with local ordinances. Some localities require a license and have specific rules and regulations when it comes to 'public traffic'. You also may have an issue that you use Sodium Hydroxide. Katie at Royalty Soaps found herself having to move her studio after someone reported her because of that (she has a video on what she went through).

I'm in Oregon.  I am a single-member LLC...costs me a $100 a year.  The EIN from the feds was free and I don't need state number (also free) since I don't have employees.  My locality doesn't require licensing and I have searched city code with regards to any Sodium Hydroxide issue and haven't found any.  I have no 'public traffic' and 'commercial deliveries' traffic is limited to USPS, FedEx and UPS.


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## AliOop (Oct 23, 2021)

ScentimentallyYours said:


> Can those of us not in business have folks who want our soap by special request reimburse us for our expenses?  Would that solve @Ugeauxgirl’s dilemma?  (Mine too!)


That can limit but doesn't eliminate liability in the event the soap "injures" someone. That typically would be due to an allergic reaction of some sort.

For anyone considering an LLC, sure to check into all the costs where you are located. In California, the set-up process is very easy and inexpensive; the whole thing can be done online in a few minutes. However, the minimum LLC tax is *$800 per year* (even if you make zero profit or sell zero products) -- AND you have to file an annual tax return for the LLC, separate from your personal tax return. That could result in additional accounting costs unless you are comfortable doing your own returns.

Also, if you are from another state and sell products in California, you must register your out-of-state LLC with the CA Secretary of State's office -- and pay the $800 minimum annual tax and file an annual return, just as if you were a California LLC.

All that to say, it's good to think about and explore all these issues. I always recommend that you talk with your tax person to determine what makes sense for your specific situation and location. There is no one-size-fits-all when it comes to choosing the right business model for your small soap business.


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## TheGecko (Oct 24, 2021)

ScentimentallyYours said:


> Can those of us not in business have folks who want our soap by special request reimburse us for our expenses?  Would that solve @Ugeauxgirl’s dilemma?  (Mine too!)



Yes…and no.  It’s complicated and convoluted.  There are hobbies, then there are Hobbies, and then there is business.  And in @Ugeauxgirl’s case with the doctor…very dangerous territory.

As long as you are giving the soap to a few family members and friends with no money exchanging hands, it’s hobby…no harm, no foul. But once you accept money…whether it is profit, break even or a “donation”, not only are you incurring legal liability, your hobby is now a Hobby and you have to report that money to the IRS. But because you are a Hobby and not a business, you don’t get to offset the ‘income’ with expenses.  

As for the ‘dangerous territory’…it has to do with ‘drug claims’. Unless you are licensed by the FDA, you can’t sell or promote soap to help/cure itching skin or eczema, etc. You can’t even say that your soap is ‘moisturizing’ without falling under the jurisdiction of the FDA for making cosmetic claims.


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## Cat&Oak (Oct 24, 2021)

At first I went with sole proprietorship and quickly changed to an LLC because I wanted my business separated from my assets. Insurance as everyone has said is a must. I went with the soap makers guild. It goes beyond that though. County and state licenses, registration for taxes, inspections etc. It gets expensive quickly, a few thousand just for initial set up. Alot depends on your state and its particular requirements.


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## Peachy Clean Soap (Oct 24, 2021)

AliOop said:


> If you do have assets, then definitely get insurance. Make sure it covers cost of defense, not just cost of judgment. There are some threads here about insurance for soapmaking that might be helpful to get you started with finding a place to buy it.





AliOop said:


> That can limit but doesn't eliminate liability in the event the soap "injures" someone. That typically would be due to an allergic reaction of some sort.
> 
> For anyone considering an LLC, sure to check into all the costs where you are located. In California, the set-up process is very easy and inexpensive; the whole thing can be done online in a few minutes. However, the minimum LLC tax is *$800 per year* (even if you make zero profit or sell zero products) -- AND you have to file an annual tax return for the LLC, separate from your personal tax return. That could result in additional accounting costs unless you are comfortable doing your own returns.
> 
> ...


Wow your information is worth it's weight in GOLD, Much Appreciation  .


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## Peachy Clean Soap (Oct 24, 2021)

Catscankim said:


> I do not have assets (unless you consider my 2004 chevy colorado an asset....TAKE HER IF YOU MUST lol)
> 
> I used to not have insurance because I was selling small scale, like friends and such. Then I had one girl approach me one day that she "scratched the [heck] out of her arm from the shell on top of the soap". "Ummm..the shell is made of soap and what kind of special person physically injures themselves with soap." she assumed the shell was real and ran with it. Her husband confirmed that she did not hurt herself with the soap and in fact loved it. Sparing you most of the details ... Her arm had no scratches on it, and I shoved $8 down her shirt to return the money lol. I have so many words for this type of person. Not worth it.
> 
> ...


Great Info. Is this insurance private & for soapers? hope thats not a stupid Q.  .


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## Peachy Clean Soap (Oct 24, 2021)

Ugeauxgirl said:


> So I'd decided not to sell soap.  I just retired a year ago from a very stressful career and I wanted to enjoy my hobby as just a hobby.  I gave a lot of soap away, but now people are asking to buy it.  Quite a few people have said that it has improved their itchy skin, eczema, etc.  People have asked for wedding favors etc.  And my girlfriend who is a pediatrician asked for some to give to her eczema patients- along with a business card, which I don't have cause I don't sell soap.  Three friends have sent me a flier about a Christmas craft event at a local school- $30 for a table.
> 
> I don't think I want to market soap, but I'd like to sell my extras, and maybe a loaf here or there.  What is the absolute minimum I need to do this?  I'm in the US.  Insurance?  Can I just sell it DBA or do I need to form an LLC?  Do I want to do this?  Somebody talk me out of it!


Such a complement on your soap' must be fantastic for so many people requesting more. Congratulation .  Thank you for posting your Q. this is such valuable information for all of us.


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## JoyfulSudz (Oct 24, 2021)

AliOop said:


> That can limit but doesn't eliminate liability in the event the soap "injures" someone. That typically would be due to an allergic reaction of some sort.


I'm curious:  If a soap label lists all its ingredients, shouldn't it be the responsibility of the user to be aware of their own allergies and avoid those substances?
I recognize that we in the US live in a fairly litigious society and often wonder what happened to the concept of personal responsibility.


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## TheGecko (Oct 24, 2021)

JoyfulSudz said:


> If a soap label lists all its ingredients, shouldn't it be the responsibility of the user to be aware of their own allergies and avoid those substances?



One of my first soaps contained Walnut Shells.  Right on the label, in CAPITAL LETTERS, BOLD, RED it said:  *CONTAINS WALNUT SHELLS*.  Had a customer look at both the front and back of the soap, then ask if it contained anything that she might be allergic too.  When I asked what her allergies were, she said she had a nut allergy.

Again...CAPITAL LETTERS.  BOLD.  RED.  It was even in a larger font and on it's on line.  

When I pointed it out, she claimed that she didn't see it.

Anyone want some Walnut Shells?


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## JoyfulSudz (Oct 24, 2021)

@TheGecko And that's exactly my point -- whatever happened to the concept of personal responsibility!


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## paradisi (Oct 24, 2021)

Avoiding allergens wouldn't protect you from correctly labeled but lye heavy soap. Or a contaminated lotion.

Lots of other potential problems out there.  I've been injured by a cosmetic but it wasn't allergy. The label was correct but the formulation was awful.

I didn't sue but I did have medical bills.


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## JoyfulSudz (Oct 24, 2021)

I totally agree, @paradisi , about issues with formulations and safe soaping practices.  It is reasonable to expect a product is made with care and safe to use. I'm so sorry you had to go through that.
Allergies though I do think are the responsibility of the end user, and I think it is good practice to provide an accurate listing of ingredients.


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## AliOop (Oct 24, 2021)

@JoyfulSudz I believe @paradisi's post filled in most of the blanks I didn't mention earlier. To expand upon that, the problem is in most states, even if you win and get their case dismissed as being unmerited, you still have to pay for an attorney to defend you. It is often the attorney fees, not the monetary award, that breaks the small business person.  We are talking a minimum of $20k and often closer to $150k to defend an average product liability lawsuit.  Even if your state does grant attorney fees to the winner, you still have to front those costs until the all the dust has settled - including any appeals of the judgment -- which can take several years.

If you have that kind of $$$ lying around to use to pay an attorney, then you probably have other assets you'd like to protect from a potential judgment, as well. Hence my recommendation purchase good insurance -- to cover the cost of defense and any potential judgment -- before spending anything on any type of corporation formation, whether LLC or S-corp.


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## JoyfulSudz (Oct 24, 2021)

@AliOop   Thanks for the detailed explanation.  I don't disagree about the need for insurance.  But I struggle with the litigiousness of our society and attempts to find blame with others for everything that goes wrong. 

My hair dryer actually has a little tag on it warning folks not to use it in the shower!


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## AliOop (Oct 24, 2021)

JoyfulSudz said:


> @AliOop   Thanks for the detailed explanation.  I don't disagree about the need for insurance.  But I struggle with the litigiousness of our society and attempts to find blame with others for everything that goes wrong.
> 
> My hair dryer actually has a little tag on it warning folks not to use it in the shower!


I hear you...as an attorney, it makes me sick what people have to spend in order to fight back against those with a victim mentality, get-rich mentality, etc.

If you ever need a little humor on the subject, listen to comedian Bill Engval's original "Here's Your Sign" routine.

Edit: Just looked it up and found it (of course) on YouTube here.


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## ~Dragonfly~ (Oct 24, 2021)

So, if I'm in California where it's $800 for an LLC, and I know I'm not going to be selling that much soap, could I just get insurance and call it a day? What am I leaving myself open to if I don't get an LLC?


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## Catscankim (Oct 24, 2021)

Peachy Clean Soap said:


> Great Info. Is this insurance private & for soapers? hope thats not a stupid Q.  .


I originally thought I was buying through Geico, which was my car insurance at the time, but I was redirected to Hiscox from Geico's website


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## AliOop (Oct 24, 2021)

~Dragonfly~ said:


> So, if I'm in California where it's $800 for an LLC, and I know I'm not going to be selling that much soap, could I just get insurance and call it a day? What am I leaving myself open to if I don't get an LLC?


For most people, especially those selling small amounts of just soap (as opposed to lotions or shampoos, which have lots more risks), paying for good insurance is probably going to be enough. 

Still, check with your CPA to get personalized advice for your situation. While it may cost you $150 for a consultation, it is worth every penny to make sure all factors have been considered before making a decision.


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## ScentimentallyYours (Oct 25, 2021)

All this talk of liability for those of us who want to give soap away makes me think I should go back to working on dichroic glass pendants. Glass is similar to soap in working with colors that blend together and can be unpredictable surprises when they come out of the kiln. The downside is I cannot scent the glass.  I love fragrances in soaps, even the scent of the unscented soaps with beeswax.  That’s why I’m making soap!  Guess I’ll go check out insurance.


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## AliOop (Oct 25, 2021)

ScentimentallyYours said:


> All this talk of liability for those of us who want to give soap away makes me think I should go back to working on dichroic glass pendants. …
> 
> Guess I’ll go check out insurance.


It is far less of an issue when you give it away rather than selling it. Selling creates much higher liability, just like renting out your spare bedroom creates greater liability than having a friend stay over for a few days as your non-paying guest.


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## Spice (Oct 25, 2021)

JoyfulSudz said:


> @TheGecko And that's exactly my point -- whatever happened to the concept of personal responsibility!


Cant make calms it’s health, cant make cams it moisturizes, cant make calms it feels wonderful, so I just calm Cleopatra used it first. I calm the history of soap. The FDA will at some point come after all the soapers


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## ScentimentallyYours (Oct 25, 2021)

AliOop said:


> It is far less of an issue when you give it away rather than selling it. Selling creates much higher liability, just like renting out your spare bedroom creates greater liability than having a friend stay over for a few days as your non-paying guest.


Thank you for that clarification, @AliOop!  I appreciate your advice and your posts.


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## Catscankim (Oct 25, 2021)

Spice said:


> Cant make calms it’s health, cant make cams it moisturizes, cant make calms it feels wonderful, so I just calm Cleopatra used it first. I calm the history of soap. The FDA will at some point come after all the soapers


So you are the one selling the alluring perfume on Facebook that claims it is an ancient recipe from Cleopatra   

Joking...


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## cmzaha (Oct 25, 2021)

~Dragonfly~ said:


> So, if I'm in California where it's $800 for an LLC, and I know I'm not going to be selling that much soap, could I just get insurance and call it a day? What am I leaving myself open to if I don't get an LLC?


I sold in California over 10 yrs and fortunately had no issues. Well, one when a child ate a marshmallow soap but there were warning on every side of the label. The mother decided not to pursue the issue. I had my insurance through The Guild and paid for the upgraded liability since I sold lotions and soaps. I did not go with an LLC since my experience, even with impeccable records, after having two S corps I found not a huge amount of protection, so I made the choice of going with good insurance. My little business just was not worth the extra work of following the rules of a corp whether an LLC or not. But that is me. This choice was not because I had nothing to lose and I know full well how much lawsuits cost.


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## AliOop (Oct 25, 2021)

cmzaha said:


> I sold in California over 10 yrs and fortunately had no issues. Well, one when a child ate a marshmallow soap but there were warning on every side of the label. The mother decided not to pursue the issue. I had my insurance through The Guild and paid for the upgraded liability since I sold lotions and soaps. I did not go with an LLC since my experience, even with impeccable records, after having two S corps I found not a huge amount of protection, so I made the choice of going with good insurance. My little business just was not worth the extra work of following the rules of a corp whether an LLC or not. But that is me. This choice was not because I had nothing to lose and I know full well how much lawsuits cost.


Thank you for sharing your real life experience- it's a perfect example of what I was trying to say, which is: good insurance beats incorporation, almost every time.

My husband's experience was this: S corp, perfect records, zero commingling. He still got sued personally due to a subcontractor's failure -- because that's what folks do to try to scare you into settling. Fortunately, he had decent (not great) insurance... plus an attorney wife who was pretty fired up and got him dismissed early by threatening a countersuit for frivolous litigation, given that there was absolutely ZERO basis to sue him personally.

Edit: I will add that in this case, having an S-corp was actually vital to protecting us. My point, however, was that the mere existence of the corporation was not enough to stop someone from attempting to sue my husband personally. That being said, he was a general building contractor, which is a very different business than soapmaking. In Cali, the GC is liable for 10 years from date of completion of the entire project, not just for his own work, but also for everything any of the subcontractors may do, or any defective product that was innocently installed. So that's an example where an S-Corp or LLC would be highly recommended. Not so much with small soap makers who are pretty much only liable for their own products.


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## Zany_in_CO (Oct 25, 2021)

cmzaha said:


> I sold in California over 10 yrs and fortunately had no issues.


Same here.


Ugeauxgirl said:


> I wanted to enjoy my hobby as just a hobby. I gave a lot of soap away, but now people are asking to buy it.


This is just me but I never needed insurance or a license to sell. I kept my hobby a hobby and it never became "a business" because I knew that would be too stressful -- been there, done that.

When I talked to our CPA, he said I could make up to $3,000 a year without having to report the income. It would fall under the category of "Casual Sales" as in selling your car to a private buyer.

The first 4 years, I sold soap & other B & B products to friends & family and at my annual garage sale which brought in another $350 - $500 every year -- enough to cover supplies for the next year. And so began the vicious cycle. LOL

My hobby has supported itself since Day 1!

I put all my expenses on a dedicated credit card and opened a dedicated checking account to track income and expenses -- an easy bookkeeping system for making and selling stuff on a casual basis. At the end of the year, the balance in my checking account was my profit for the year.

It wasn't until I was approached by Soapmakers on the Group I was in who needed someone to make product for them to keep up with demand that I started reaching my $3,000 limit. WOO HOO! My thought was to use the money for vacation, but, more often than not, it went to pay for a new water heater, AC, roof, etc. There was always something! 

If I were starting out today, I would invest in a "Personal Card" vs. "Business Card" with my name and contact info on the front, i.e., my email and phone number. I'd list my products on the back.

Although I sold soap "naked" at first, and did well, I later developed a *Cigar Band Label* that had contact info, ingredients, net wt., and coded date of manufacture clearly listed. The code I used was a 6-digit one, i.e., today's date is 102521. This comes in handy if any questions arise. For example, if you make and sell lotion you may want to put an expiration date such as "6 months from date of manufacture" on it.


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## cerelife (Oct 26, 2021)

@AliOop Thank you for all the great advice!!
When I decided to create a business I went to our accountants for help and advice on how to do so. Insurance was a must (I have mine through the Guild), and they recommended against an LLC in my case. The reasoning behind this was that even if I kept meticulous records per my funds, I would almost certainly be named personally in a product liability lawsuit as the sole creator/maker of my products. This conversation was several years ago so I don't remember it verbatim but to paraphrase: "Liability lawsuits tend to go after the deepest pockets. Your personal assets are far greater than your business assets so it's extremely likely that you would be named as the person who made the product in question, and having an LLC isn't going to protect you at all in this scenario."
This makes perfect sense to me, but I've seen many people on this forum and elsewhere (including IRL) who disagree with this idea.
I think you may have cleared this up in the prior post about your husband, but could you please clarify if the advice I received was valid?
Thank you again for all your great advice!


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## Peachy Clean Soap (Oct 26, 2021)

Catscankim said:


> I originally thought I was buying through Geico, which was my car insurance at the time, but I was redirected to Hiscox from Geico's website


Thank you


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## AliOop (Oct 26, 2021)

cerelife said:


> @AliOop Thank you for all the great advice!!
> When I decided to create a business I went to our accountants for help and advice on how to do so. Insurance was a must (I have mine through the Guild), and they recommended against an LLC in my case. The reasoning behind this was that even if I kept meticulous records per my funds, I would almost certainly be named personally in a product liability lawsuit as the sole creator/maker of my products. This conversation was several years ago so I don't remember it verbatim but to paraphrase: "Liability lawsuits tend to go after the deepest pockets. Your personal assets are far greater than your business assets so it's extremely likely that you would be named as the person who made the product in question, and having an LLC isn't going to protect you at all in this scenario."
> This makes perfect sense to me, but I've seen many people on this forum and elsewhere (including IRL) who disagree with this idea.
> I think you may have cleared this up in the prior post about your husband, but could you please clarify if the advice I received was valid?
> Thank you again for all your great advice!


You absolutely did the two best things: talk to your tax professional about your specific situation, and buy insurance!

I can’t possibly disagree with your professional’s specific advice for you, since I don’t know all the ins and outs of your business, finances, local and state laws and regulations, etc. The risk-benefit evaluation is so personal to each situation.

In our case, while the existence of the corp did not stop them from naming him personally as a defendant, it did stop them from getting a judgment against him personally, or even a settlement from him, and we did get him dismissed from the suit without having to go through the entire thing. He did have up to 12 employees at any given time, however, so he was not the sole actor within the corp, either.

Bottom line, if you trust your professionals, and have laid out all the facts of your situation to them, then going with their advice is best. Everything you said that they said sounds reasonable given what you shared here about your situation. You can and should check back with them every so often to make sure that the laws or the general liability climate haven’t changed, which could affect how they advise you.


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## Peachy Clean Soap (Oct 26, 2021)

AliOop said:


> You absolutely did the two best things: talk to your tax professional about your specific situation, and buy insurance!
> 
> I can’t possibly disagree with your professional’s specific advice for you, since I don’t know all the ins and outs of your business, finances, local and state laws and regulations, etc. The risk-benefit evaluation is so personal to each situation.
> 
> ...


Your one smart cookie .

Update: This is random.  Speaking of cookies' I ordered the polkadot bags that you had posted a picture of showcasing your wrapped soap a while back. i'm excited to get them.


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## AliOop (Oct 26, 2021)

Peachy Clean Soap said:


> Your one smart cookie .
> Update: speaking of cookies' I ordered the polkadot bags that you had posted a picture of showcasing your wrapped soap a while back. i'm excited to get them.


Awww thanks Peachy! We all have our own areas where we know a bit more… or less.  Hope you love the bags as I do!


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## cmzaha (Oct 26, 2021)

cerelife said:


> @AliOop Thank you for all the great advice!!
> When I decided to create a business I went to our accountants for help and advice on how to do so. Insurance was a must (I have mine through the Guild), and they recommended against an LLC in my case. The reasoning behind this was that even if I kept meticulous records per my funds, I would almost certainly be named personally in a product liability lawsuit as the sole creator/maker of my products. This conversation was several years ago so I don't remember it verbatim but to paraphrase: "Liability lawsuits tend to go after the deepest pockets. Your personal assets are far greater than your business assets so it's extremely likely that you would be named as the person who made the product in question, and having an LLC isn't going to protect you at all in this scenario."
> This makes perfect sense to me, but I've seen many people on this forum and elsewhere (including IRL) who disagree with this idea.
> I think you may have cleared this up in the prior post about your husband, but could you please clarify if the advice I received was valid?
> Thank you again for all your great advice!


This is the problem they go against you personally. I also was in a partnership in a C-Corp, which also gets really ugly. I chose to carry a huge umbrella policy to cover my personal assets, etc, and the higher-end Guild insurance. It was not cheap, but I was a member and carried my policy through their underwriter from day 1 of selling. If you start fooling with your homeowner's insurance for insurance you have to be very careful they do not consider you a manufacturer, which can get really ugly.

I ran into this issue when our State Farm Agent sold and one of his office gals told the new agent I make and sell soap. His comment was we will have to talk about my manufacturing soap at home. Fortunately, at the time we still had our shop and I informed them I do not make it at home but in our shop, he dropped it. So you can risk losing your homeowners insurance. This was the house I recently sold that I could barely get insurance on due to being a stilted hillside home, so I could not afford to lose my insurance.


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## AliOop (Oct 26, 2021)

Excellent points, Carolyn! For those in California, the cost of basic soapmaking insurance plus an additional umbrella policy is usually far cheaper than the ongoing cost of an LLC or S-Corp, and will offer so much more protection to the typical maker. Other states may offer less expensive LLCs, but if I had a limited budget (which most of us do), I'd still invest my money towards insurance first. But everyone's situation is so different - talk to your tax professional and if needed, business lawyer, too.


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## Mommawolfe (Oct 27, 2021)

Catscankim said:


> I do not have assets (unless you consider my 2004 chevy colorado an asset....TAKE HER IF YOU MUST lol)
> 
> I used to not have insurance because I was selling small scale, like friends and such. Then I had one girl approach me one day that she "scratched the [heck] out of her arm from the shell on top of the soap". "Ummm..the shell is made of soap and what kind of special person physically injures themselves with soap." she assumed the shell was real and ran with it. Her husband confirmed that she did not hurt herself with the soap and in fact loved it. Sparing you most of the details ... Her arm had no scratches on it, and I shoved $8 down her shirt to return the money lol. I have so many words for this type of person. Not worth it.
> 
> ...


I have Liberty mutual. $44.00ish a month, worth the peace of mind! Because it is a "manufacturing" process, it isn't the easiest insurance to find. At the time I got the insurance, Liberty was the only one that would insure soap making, so, i have stuck with them.


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## maxine289 (Jan 7, 2022)

Catscankim said:


> Hiscox


One of my goals for 2022 is to get my insurance in order.  I have business insurance thru Erie, which is does my home owners policy, but I'm researching to see if there is better coverage available.  I called Hiscox and was told that they do not cover soap or candle makers because that is considered manufacturing.  Has anyone run into this issue with trying to obtain insurance?


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## AliOop (Jan 9, 2022)

Have you looked at HSCG?


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## maxine289 (Jan 9, 2022)

AliOop said:


> Have you looked at HSCG?


I am doing that now.  I requested a copy of the HSCG policy so I can see what the coverage provisions are.


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