Like a lot of people, we often thought about having our own business,
but weren’t sure what to do. One day my wife, Kim, was talking to her
brother, Chris, and he started to talk about his six pack abs.
Not to let an opportunity to needle my brother-in-law go by,
I told him he didn’t have six pack abs, but had twelve pack abs
from all the Budweiser he drinks. Of course this brought on an insult
melee, which turned into a brainstorming session on a company called
12 Pack Abs., which offered humorous athletic apparel.
As the discussion progressed, we felt that it was a novel concept
to offer this kind of athletic apparel, but “Abs” was too narrow and
thought Gym would be more encompassing. From that point on a business
concept was born. After that we met almost nightly, getting ideas
for different shirt designs. When we had ten or so, Kim, who is an
artist, drew up color pictures so we could see the designs.
What transpired below are our experiences in setting up our company,
12 PACK GYM, Inc., and our web site www.12packgym.com.
Since none of us ever put together a business before, the prospects of
doing so appeared daunting. However, we figured we were a reasonably
smart group of people with backgrounds in business, art, management,
and distribution. The first order of business was to secure a domain
name or internet address. I got a recommendation from a coworker.
I looked up that company on the internet, and they were offering a two
year registration for forty dollars. I did a search on www.12PACKGYM.com,
and it came up as available. The price seemed reasonable, so I signed
up for www.12PACKGYM.com domain name. I later came to learn that we
could have gotten that cheaper if we had researched other companies
that offer that service.
The next order of business was https://www.alexandremthefrenchy.com/ to figure out what type of business
we wanted to be. Since there are three of us, our choices were
Partnership, Limited Liability Company or L.L.C., or a
Subchapter S Corporation. Each entity has its own advantages and
disadvantages. Partnerships are relatively easy and inexpensive to
set up. The downside to them is you have unlimited liability.
With an L.L.C. you have the income treatment advantages of a
partnership, but you have limited liability. The downside to these
is that they are more complex and cost more to set up. Also, there are
differences in how L.L.C.’s are treated depending on what state you
are formed in and doing business in. In addition, if you get into
legal trouble, because of their relative newness, there is limited
case law for these entities. The last type of entity and ultimately
the one we went with is a Subchapter S Corporation. These are actual
corporations that you own stock in where the IRS treats income
distributed to the shareholders like a distribution from a partnership.
You have limited liability. There is very strong case law for this
type of entity and the rules are the same no matter which state you
are in. The downside to these is that they are complex to set up;
there are a host of different filing requirements with the state you
are incorporated in, and they cost more to set up. We set our
S Corporation up with the assistance of a company called
Par Corp Services, LTD, which I found on the internet. For a fee of
approximately $400.00, they filed the necessary paperwork with the
State of Illinois to incorporate 12 PACK GYM and answered questions
we had.