TexasCHLforum.com

I originally planned to do my gun instructing (CHL, NRA, Basic/Advanced) as a hobby business. It seems to be taking off (for now). Has anyone set up a business account at a bank for this? Do you need to get an EIN? Is there a point at which you decide this should be done on a Schedule C and SE as a business income? Paying state sales revenue tax?

I needed an EIN (had an LLC) and Tx Sales tax permit, also had to show articles of incorporation. It was no biggie. Banks gladly open business accounts for legitimate businesses, it's just a matter of showing your documents. It's a worthwhile step forward IF you expect the business will get significantly bigger (that is: More than you as an employee).

OldCannon wrote:I needed an EIN (had an LLC) and Tx Sales tax permit, also had to show articles of incorporation. It was no biggie. Banks gladly open business accounts for legitimate businesses, it's just a matter of showing your documents. It's a worthwhile step forward IF you expect the business will get significantly bigger (that is: More than you as an employee).

Can't imagine any need for me to hire employees. Mine is basically a hobby business, but folks want to make out checks to "Castle Keep" rather than to my name.

wgoforth wrote:

OldCannon wrote:I needed an EIN (had an LLC) and Tx Sales tax permit, also had to show articles of incorporation. It was no biggie. Banks gladly open business accounts for legitimate businesses, it's just a matter of showing your documents. It's a worthwhile step forward IF you expect the business will get significantly bigger (that is: More than you as an employee).

Can't imagine any need for me to hire employees. Mine is basically a hobby business, but folks want to make out checks to "Castle Keep" rather than to my name.

An "EIN" is like a SSN for companies. It's just an identifying number -- it's how the IRS identifies your company. You should talk to a lawyer, or a tax accountant to figure out the best way for your situation. You might be able to do the paperwork yourself with a little guidance to get started.

sjfcontrol wrote:

wgoforth wrote:

OldCannon wrote:I needed an EIN (had an LLC) and Tx Sales tax permit, also had to show articles of incorporation. It was no biggie. Banks gladly open business accounts for legitimate businesses, it's just a matter of showing your documents. It's a worthwhile step forward IF you expect the business will get significantly bigger (that is: More than you as an employee).

Can't imagine any need for me to hire employees. Mine is basically a hobby business, but folks want to make out checks to "Castle Keep" rather than to my name.

An "EIN" is like a SSN for companies. It's just an identifying number -- it's how the IRS identifies your company. You should talk to a lawyer, or a tax accountant to figure out the best way for your situation. You might be able to do the paperwork yourself with a little guidance to get started.

Yes, thanks. I am looking into an LLC. Financial wise, it isn't producing enough revenue to tax by the time I offset it with current expenses. It could still be counted as a hobby business were it not for the issue with checks.

When I set my CHL instruction business up my Attorney/CPA friend advised to set up a LLC using my name rather than a DBA. He said If in the future I wanted to do some other line of business instead or in conjunction to the training I wouldn't need to establish a new LLC. That' what I did I'm G Morris Jones LLC for business purposes.

Consult with an attorney or CPA to be sure you are taking the right steps.

A separate checking account will help keep your records straight no matter wheter you operate as a sole proprietor, form a LLC or whatever. I think IBC still has a small biz account that's free if you don't write a lot of checks

A little OT, sorry.. but..

You're in a business that involves the discharge of firearms.
Do you have insurance if there's an accident at the range? Is this required for instructors?

Even if you have insurance, "what if" an accident settlement (after civil court) is greater than your insurance coverage?
They will take your house, bank accounts and retirement (not quite, but, almost), that's "what if".

Having a registered business (corporation, LLC or similar, NOT just a DBA), IMO, is a prudent financial necessity, not an option or a "like to have" if you're involved in a firearms related business.

YMMV.

RoyGBiv wrote:A little OT, sorry.. but..

You're in a business that involves the discharge of firearms.
Do you have insurance if there's an accident at the range? Is this required for instructors?

Even if you have insurance, "what if" an accident settlement (after civil court) is greater than your insurance coverage?
They will take your house, bank accounts and retirement (not quite, but, almost), that's "what if".

Having a registered business (corporation, LLC or similar, NOT just a DBA), IMO, is a prudent financial necessity, not an option or a "like to have" if you're involved in a firearms related business.

YMMV.

On that aspect... Already run past a lawyer who is also a Judge Advocate General Assist (JAG). He said that as long as I have a signed waiver, and the liability immunity given by the state, there shouldn't be an issue. That said, I am an NRA instructor and looking into purchasing their insurance as well. But no, not required of instructors.

GC §411.208. LIMITATION OF LIABILITY.

(a) A court may not hold the state, an agency or subdivision of the state, an officer or employee
of the state, a peace officer, or a qualified handgun instructor liable for damages caused by:

(1) an action authorized under this subchapter or a failure to perform a duty imposed by this subchapter; or

(2) the actions of an applicant or license holder that occur after the applicant has received a license or been denied a license under

this subchapter.

(b) A cause of action in damages may not be brought against the state, an agency or subdivision of the state, an officer or employee of

the state, a peace officer, or a qualified handgun instructor for any damage caused by the actions of an applicant or license holder under

this subchapter.

(c) The department is not responsible for any injury or damage inflicted on any person by an applicant or license holder arising or

alleged to have arisen from an action taken by the department under this subchapter.

(d) The immunities granted under Subsections (a), (b), and (c) do not apply to an act or a failure to act by the state, an agency or subdivision

of the state, an officer of the state, or a peace officer if the act or failure to act was capricious or arbitrary.

(e) The immunities granted under Subsection (a) to a qualified handgun instructor do not apply to a cause of action for fraud or a deceptive trade practice

I think getting insurance as an instructor is a smart thing.

Getting a Texas LLC isn't too hard either. You can get a lawyer to do it for 200-300 bucks. I wouldn't put it in my name either, but that's because (for me) I am working to have a company that has a life beyond me (either by selling it off or passing it on to somebody else when I can no longer run it).

One other small nit - you're not supposed to have your business logo as your avatar. http://texaschlforum.com/viewtopic.php?f=2&t=35791" onclick="window.open(this.href);return false; Lord knows I'd love to use mine LOL.

OldCannon wrote:I think getting insurance as an instructor is a smart thing.

Getting a Texas LLC isn't too hard either. You can get a lawyer to do it for 200-300 bucks. I wouldn't put it in my name either, but that's because (for me) I am working to have a company that has a life beyond me (either by selling it off or passing it on to somebody else when I can no longer run it).

One other small nit - you're not supposed to have your business logo as your avatar. http://texaschlforum.com/viewtopic.php?f=2&t=35791" onclick="window.open(this.href);return false; Lord knows I'd love to use mine LOL.

Thank you for the headsup on the avatar. I wasn't aware and will remove it .

wgoforth wrote:as long as I have a signed waiver, and the liability immunity given by the state, there shouldn't be an issue.

Until the jury verdict.
I wasn't necessarily referring to liability associated with the things listed in the immunity language you quoted.

For example.... your student is injured/maimed/killed at the range, by a ricochet or a negligent shooter in the next lane, not enrolled in your class (even worse, a shooter that IS enrolled in your class). You can bet the jury will award damages against the shooter, the range and your company. Do you have sufficient insurance to cover an unknown jury award.?

You're certainly welcome to take advice from those you trust and Lord knows I'm just some guy on the internet. Having a properly-registered and up-to-date corporation standing between your personal assets and your business mishaps will prove invaluable should you need it.

There's a parallel adage that might fit here... It's a computer thing... Goes like this..
"There are two kinds of people in this world, those that do regular backups and those that wish they had."

Apologies for the tangential direction of my comments here. I'm obviously of the strong opinion that not incorporating is like playing roulette with your financial future. I'll refrain from further comments on this tangent.

RoyGBiv wrote:

wgoforth wrote:as long as I have a signed waiver, and the liability immunity given by the state, there shouldn't be an issue.

Until the jury verdict.
I wasn't necessarily referring to liability associated with the things listed in the immunity language you quoted.

For example.... your student is injured/maimed/killed at the range, by a ricochet or a negligent shooter in the next lane, not enrolled in your class (even worse, a shooter that IS enrolled in your class). You can bet the jury will award damages against the shooter, the range and your company. Do you have sufficient insurance to cover an unknown jury award.?

You're certainly welcome to take advice from those you trust and Lord knows I'm just some guy on the internet. Having a properly-registered and up-to-date corporation standing between your personal assets and your business mishaps will prove invaluable should you need it.

There's a parallel adage that might fit here... It's a computer thing... Goes like this..
"There are two kinds of people in this world, those that do regular backups and those that wish they had."

Apologies for the tangential direction of my comments here. I'm obviously of the strong opinion that not incorporating is like playing roulette with your financial future. I'll refrain from further comments on this tangent.

No no! I am out for all the advice I can get. Wanting to balance it between what is reasonible and cost effective for a cottage industry and yet not be foolish to have no planning. Most CHL instructors I know have no coverage, waivers of any type, unless they also run a range or the like. I have always tended to be one "overly prepared" if there can be such a thing.

I am currently enrolling as we speak in the NRA Firearm Coverage.

wgoforth wrote:No no! I am out for all the advice I can get.

Ok... then... one more post... last one.. promise..

1. Register a Texas company - $300
http://www.sos.state.tx.us/corp/index.shtml" onclick="window.open(this.href);return false;

2. Get an EIN from Uncle Sam - Free online, instant.
http://www.irs.gov/businesses/small/art ... 67,00.html" onclick="window.open(this.href);return false;

3. Get a Tax ID from Uncle Perry (I think you can do this all online now..). Free.
http://www.window.state.tx.us/taxinfo/s ... iness.html" onclick="window.open(this.href);return false;

Each year you will need to file a TX franchise tax report and a TX PIR (public information report). These can be done online in 10 minutes or less, you just need to know your total revenue. If total revenue is less than (??) $1 million dollars (?? check me on that), you should not owe any franchise tax to the State of TX.

You'll need to do some research about service businesses and sales tax (which is different form franchise tax, of course).... If you are in a business that is required to collect sales tax, you'll have this obligation either way (not incorporated vs incorporated). Sales taxes can be paid online also.

For uncle Sam, you'll need to select to be taxed as a sub-S corporation (if you want to... Use IRS form 2553 to make this election within ~75?? days of filing for TX incorporation... Even if you register as an LLC, a small LLC can still elect to be treated as a Sub-S for tax purposes. Read the documents.. it's annoyingly unclear, but not too difficult). Then all your income will pass through to your personal return. Just get some business tax software and generate the correct schedule to report your business income to the Federal government and claim it properly on your personal return..... Easier than it sounds once you do it the first time. My business is more complex, so I have an accountant do this work for me. If you usually do your own personal taxes, you should be able to do this on your own also.

IMO... this is more important and more valuable than insurance. YMMV.
Total cost $300 and some time...

ETA: There are of course some additional things you need to do to make sure the corporation remains in good standing and that a lawsuit cannot "pierce the corporate veil" (suggest you google that quoted term). File all necessary paperwork (aside from Federal Tax returns, this is a total of about an 2-3 hours per year for me), keep clear records (income, expenses, etc. - You should be doing this anyway), record important decisions in writing ("I/We selected this range for the shooting portion because...."), write an annual report (one well-written paragraph may be enough), etc... Really easy stuff to do.. less than an hour per month total for a "garage" business.

RoyGBiv wrote:

wgoforth wrote:No no! I am out for all the advice I can get.

Ok... then... one more post... last one.. promise..

1. Register a Texas company - $300
http://www.sos.state.tx.us/corp/index.shtml" onclick="window.open(this.href);return false;

A registered agent may be a good idea if you form a corporation or LLC. Of course, it's not absolutely necessary, as long as you (or an employee) will be at the business location during "business hours" (not necessarily your business hours) every business day of the year.