Set up Your Ice Cream Shop Business Structure

Setup Your Ice Cream Shop Business Structure

Start Your Ice Cream Shop

Setup Your Ice Cream Shop Business Structure

Before you start your ice cream business, you’ll need to set up your initial business structure.

This is among the essential first steps in getting your ice cream shop off the ground. Your business structure is your official proclamation that your ice cream business is a “real entity.” Once you form your ice cream business structure, you can act in your business’s official capacity – this includes opening a bank account, hiring staff, and applying for credit, among other essential steps.

There are different types of business structures that you can choose from. This post will discuss some of the common options you’ll have to set up your ice cream business structure.

Further Reading: How to Open Your Ice Cream Shop

Choosing Your Ice Cream Business Structure

Your ice cream business formation can be done by choosing a specific type of structure, each with its own benefits and tax implications. We will briefly review the standard options below.

Ice Cream Business Sole Proprietorship

A sole proprietorship is a common business structure that can work for various businesses. This is commonly used by one individual, where one member solely owns the business. As a sole proprietor, there is no legal distinction between the owner and the business.

All profits generated by the business are reported as income regarding personal taxes as a sole proprietor. However, since this type of business structure offers very little legal protection, it is not often the first choice when setting up an ice cream business. Does a sole proprietorship make sense for an ice cream business? It’s up to the entrepreneur to decide; however, many ice cream shop owners decide on other available business structures.

Ice Cream Business Partnership

A partnership is a business owned by two or more individuals. For example, owning an ice cream business with a partner is relatively common. However, it is essential to know that are several types of partnerships. These include a general partnership (GP), limited partnership (LP), limited liability partnership (LLP), and a less common one is a limited liability limited partnership (LLLP). These have slight but significant differences that you’ll want to research with your partners. Whichever you choose, partnerships often grant each partner the ability to report their own share of the profits and losses to the IRS, which will “pass through” as income with their personal IRS filing.

Ice Cream Business Limited Liability Corporation

A limited liability company (LLC) is a business structure that creates a separate entity from individual members. You may have a single-member LLC or a multiple-member LLC (and thus a partnership).

The LLC provides several benefits regarding liability and taxes that you might consider. Probably the most important is the limited liability the members have if something happens to the business. For example, if a customer falls and hurts themselves over a negligent act, the customer generally cannot personally sue the individual owner but may sue the LLC. This protects the owner from losing his personal assets.

Ice Cream Business Corporation

A corporation is another business structure that is utilized by many businesses. It is a structure that allows the most protection for its owners but entails much more work.

In addition to being more cumbersome to maintain (meetings and filings), corporations pay income taxes on their profits. This is unlike the other common business formation, such as an LLC, which allows revenue to pass through to their members’ personal income, thereby avoiding paying taxes twice. If you want to avoid paying taxes twice on your income, perhaps another business structure may be more appealing.

Ice Cream Business Non-Profit

While not a specific type of structure, a non-profit can be set up in several ways, including as a corporation, LLC, partnership, and trust. It’s not common that ice cream shops are structured as non-profit, but they certainly can be. If you are interested in having an ice cream business non-profit, you may, for example, set up your business as an LLC and then apply for non-profit status. This is just one way to establish a non-profit.

Further Reading: How to Pick Your Ice Cream Shop Location

How to Apply for Your Ice Cream Shop Business Structure

Once you decide which business structure works best for you and your ice cream business, you can then proceed to apply through your state’s Secretary of State’s office. Again, this process is relatively easy in the United States and can be done online.

Before you apply for your business structure, you’ll want to have the following:

Your Ice Cream Business Name

While this might sound obvious, you will want to research your name and ensure that your new business will not infringe on anyone’s copyright or trademark.

In addition to your name, you may also decide to have a “dba” or “Doing Business As” name.

Your Address

You will need to have a business address. If you have not found a business location yet, that’s okay. However, you need a physical mailing address for essential documents to be mailed to you. Once you get your physical address, you may consider changing it when you renew your filing.

Members’ Contact Information

If you have one or more other members, you will need to also have their names and personal contact information. In addition, you will likely need to list them as members.

Your Filing Fee

Your state’s Secretary of State’s office will charge a fee for your business structure filing. Often the initial filing may be more expensive. However, subsequent renewals may be less expensive. You will likely need to renew your filing annually to maintain good standing to do business.

Different Tax Implications

As we have briefly covered, each type of business structure has its own specific tax implications for each member. Therefore, I encourage you to do additional research and weigh each structure’s tax obligations.

Liability Protections

One benefit of forming a business is that structure allows for some insulation from legal or financial exposure. This can give you, the ice cream shop owner, more peace of mind when doing business. As with any business, anything can go wrong. Being able to operate a business shouldn’t have to put your financial well-being in jeopardy.

Your Ice Cream Business Structure

(Additional Questions)

What is a common business structure for ice cream businesses?

Many independent ice cream business entrepreneurs often choose to set up an LLC. Whether a single-member LLC or a multiple-member LLC, a limited liability company offers a good mix of liability protection and ease of maintenance.

How expensive is it to set up your ice cream business structure?

The initial filing can be more expensive. This is because each state structures their costs schedules annually. However, you can expect to pay $200 – $800 for the initial filing and an annual filing fee. In the state of Washington, it is currently under $100. This contrasts with California, where the renewal fee is currently $800 per year.

Is it easy to set up your ice cream business formation?

Yes! Most states make things super easy to establish an account and apply. Additionally, many states make the renewal process even easier too! I recommend going to your state’s Secretary of State website and starting the process.

Beware of Scammers

As with anything online, some prey on unsuspecting businesses, they may publish official-looking websites with similar names – to collect your information and even charge you for things that are essentially free if you go to the official site.

Additionally, you may get official-looking mailers from businesses that charge you high fees for various documents, labor law posters, and other materials that you can get for free.

Start Your Ice Cream Shop Planning With Us

There has never been a better time to open an ice cream business. Demand for high-end ice cream will continue to rise over the next decade. So now, whether you want to open a brick-and-mortar ice cream shop or a mobile ice cream business, you’ll want to start your planning with us!

Our Ice Cream Business Kit is packed with all the information you need to start your ice cream business planning.