Do I need to setup a business?

[tumbleinn]

What is the name of your state? TX

My husband is the head cook of a local BBQ cook off team. They go around the area cooking in competitive cook offs. Of recent, we have been asked by several companies to consider opening up sponsorships to help to ease the costs of the meat, wood, gas etc. We are just a group of friends doing this for fun, but this might be an area we would consider since they are beginning to cook more and more.

I know the sponsors love the free food they get when they come out to our event, and I am sure that the sponsors would like to be able to take this $ off their taxes in the future, but not sure they can first. Secondly, would we be best to get a Tax ID number and anything else. DBA??

Not sure, but certainly apprecaite the help!!

Thanks!
Renee

 

[clueless3]

First of all, does COMPETITIVE BBQ COOK-OFFS generate any other type of INCOME besides the WINNINGS?? How have you filed these winnings in the past? I guess these winnings must large enough to justify your doing this, right? Either that or you just LOVE to cook for other people for free!

From a FINANCIAL standpoint, I'm not sure if making this into a BUSINESS would save you money (because there is an overhead for an LLC or a Corp), but you certainly can deduct your expenses against the income, whatever it is.

From a LEGAL standpoint though, it's always a good idea to form an LLC or a Corp to protect yourself personally if someone happens to eat a FINGERNAIL from these BBQ.

I know the sponsors love the free food they get when they come out to our event, and I am sure that the sponsors would like to be able to take this $ off their taxes in the future, but not sure they can first.

Any business can deduct anything as long as it's "necessary and ordinary" for similar businesses to do so.

Secondly, would we be best to get a Tax ID number and anything else. DBA??

Form an LLC or a Corp and get a tax ID. A "DBA" is not necessary if you're doing business in the name of the LLC or Corp.

 

[tumbleinn]

thank you clueless3

Thank you.

The winnings (we haven't placed yet..) are typically $500-$1000 dependent upon place finish. Yes, the team just does this for the fun and experience. They only go to about 5-6 a year. We also cook by request for some. Not big like a caterer, but small.

I do think we need to form the LLC and get the Tax ID as you stated for nothing other than the protection.

Thanks much!