A reselling business as an EC - form an LLC?

eggbeater · June 2

For the past 5 months my S21 has been building a small online business reselling "hypebeast" clothing and shoes (such as collectible Air Jordans, Yeezys, Supreme Brand clothes) He advertises mainly through his business Instagram account and Offerup. He makes a small profit by selling around $750 to $1000 worth of merchandise monthly. I think it is a great tool for him to apply concepts like supply/demand, branding his own business and negotiation.

At this point this really has become his biggest passion so it definitely will be an EC that he will be listing on his college apps. My question is does he need to form an LLC or a corporation to make it more legitimate in the eyes of the admissions committees?

His other EC's will include high school basketball and volunteer work as a junior member of the local Lions club.

blossom · June 2

If he needs to form an LLC or incorporate for the sake of collecting and submitting sales taxes, filing his self-employment taxes, getting a wholesaler certificate so that HE isn't being charged sales tax on his merchandise, then he should do that.

He doesn't need to do it for the sake of college admissions; just that if he's comingling cash with money that comes from other sources, it's going to make filing his taxes and other administrative tasks more complicated than it needs to be.

His call. But learning the bookkeeping of being an entrepreneur is a good skill to master early on.

gouf78 · June 5

I wouldn’t do it for college admissions. But certainly would for a legitimate interest in forming a business. It’s record keeping, filing taxes etc., forming a corporation with all the reports etc. Quite an education and very valuable for the future. But it’s not an extracurricular endeavor to pad a college admissions app

eggbeater · June 9

so are you saying it shouldn't be listed as an EC?

milee30 · June 9

Whether he lists it as an EC depends on how it fits with the rest of his app and the overall picture he's trying to show the college. That's an issue that's independent of whether it should be registered as an LLC; I don't believe most AOs will give a fig whether the legal structure of the business is an LLC or sole proprietorship.

dronedad · June 10

Thanks milee30. Honestly I haven’t really thought about fitting with his app and an overall picture to show colleges. It’s just something he loves doing outside of school and sports.

compmom · June 10

Of course he should list it as an EC, along with basketball and his volunteer gig. Don't worry about creating an "overall picture." And don't worry about the issue of creating an LLC either unless he needs to for business/tax reasons.

Knowsstuff · June 10

So my son had an ebay business with coins that he went to real auctions since he was 9 years old and resold some online. His profit margin was around the same when he had coins to sell and sometimes more. He is at Michigan for engineering but wants to go into business also. This was actually most of his essay for Michigan but he brought in things related to engineering also. He never stated it was an llc etc. Actually it's a hobby and they both are learning pretty important lessons which can be applied in many different ways.

Keep in mind key terms like "researching" products. My son had to figure out pricing based on current situations and value since it can change quickly so "predictive analysis" comes up. Using excel spreadsheets, dealing with customers, stock etc. Colleges get that it's not listed on the Dow.. Lol...

It's all great lessons to learn and I think an absolute great EC. Shows motivation, determination, and willingness to learn.

cptofthehouse · June 10

I just started a thread in this in the Parent’s Forum.

First of all, since this is an activity of his, and hopefully an interest, of course, it should be listed. It’s part of who he is. Why on earth would he omit something that is so intrinsically part of his life?

If you are asking if this activity is going to pack a lot of clout in getting acceptance to the most selective schools, ...ummmm, not so much. It appears a lot of kids doing this. Like a helluva lot. Unless it’s something truly out of the ballpark homerun type thing , it goes into the stack with others uniqueness out of what has become same, each kid trying to spin as much importance and uniqueness in what is rapidly becoming a commonplace EC

dronedad · June 10

Hey there. Not really looking for a lot of clout but I have heard that the activity should be verifiable. I probably did a poor job of framing my question.

cptofthehouse · June 10

Well, yes. Any and every EC should be. If an AO checks it out and claims on app are non existent or inflated, it’s over

Knowsstuff · June 10

No college is going to ask for proof since these are all just hobbies. It should be real but like cutting grass and getting paid for it. It shows the college your kid is just not playing video games or watching TV in their free time and that is a good thing. Doing something is better then doing nothing with your free time.

EyeVeee · June 10

You need to get some solid advice for personal protection and profitability reasons...college admissions shouldn't care much about form of entity.

I would be really careful not to create a ton of administration...sales tax collection, income tax returns, etc. It's a great experience and something that should speak well for your son, but you don't want to distract from a potential $250k education for a few hundred dollars per month of profit. If you calculate the income/hour....is he making a reasonable return for his time? By the time you get things organized with professional help (accountants, lawyers), you could make no money this year.

I would also be leery to make too much of this for college admissions. I think it's a great EC, but it's one aspect of a multi-faceted app.

milee30 · June 10

Don't worry about creating an "overall picture."

Why on earth would he omit something that is so intrinsically part of his life?

Every kid is different, so there is no one 'correct' answer. Many kids applying to colleges have more interests and activities than fit on the CA form. And even for those that have so few that they do fit on the CA form, it's a good idea to pick and choose what they show the school, even down to putting them in order of importance.

This could be the type activity that's important enough it's the top thing listed on this kid's app or it could just be one of dozens of things this kid does and not be important enough to be listed.

threebeans · June 10

My son did this in high school also and didn't use it on his application materials - never occurred to us actually. He did have another part time job that I think held some weight though.

blueskies2day · June 10

Sure, it's an EC and there are good lessons within it. But watch overestimating it's importance and blowing a bunch of smoke that they can see through. Virtually any teen/20 something we know is selling stuff on one of the many sites out there, and/or creating their own online stores. If it is a passion of his great, but it shouldn't be considered a unique EC, agree with @milee30, it is up to him to determine/show how important it is to him on his app.

Knowsstuff · June 10

To be clear I am not suggesting to make it the college essay

In my son's case he did since what he has done was so different according to a friend of ours that is a college counselor. My son has been doing live auctions bidding against adults /jewelers /collectors since he was 9. Even his Michigan counselor told him it's only the second time she had read this in an essay and the first was one of her best friends that she introduced to my son, that also collects /sells coins (certain type). But it was how he interrelated his experience to engineering that was clever.

politeperson · June 11

It’s a legitimate EC but he shouldn’t make decisions about business entity type based an admissions as it’s unlikely to make a difference there. BUT he should consult with a local CPA or do the research on his own to make sure he understands tax filing requirements and the pros and cons of different entities. Some of this is going to vary by state.

A reselling business as an EC - form an LLC?

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