In this episode of the Machine Shop MBA series, we go beyond vision boards and get into the meat and potatoes of launching your shop legally—with the right entity type and structure to support your short and long-term goals. Whether you’re looking to stay solo, bring on partners, or position for future investment or acquisition, your business formation choice can be the foundation—or the friction—of your growth. 

In this episode, the team dives deep into the critical, yet often overlooked, process of legally forming a manufacturing business. The hosts, alongside experts Nick Vargosko and Brad Boettcher from CliftonLarsonAllen, break down the most important steps in choosing the right legal entity, from sole proprietorship to S-corporation and LLCs. They also touch on how these decisions will impact your long-term goals, including potential exits and tax benefits.

Why does the structure of your business matter? It’s all about protecting your personal assets, optimizing your tax strategy, and setting your business up for future growth or eventual sale. The team discusses real-world examples and offers insights into what business owners often miss when it comes to entity selection. With the right foundation, your machine shop can thrive, but getting it wrong early could mean expensive and painful mistakes down the road.

Tune in as we walk you through the legal nuts and bolts of starting your shop, with expert advice on how to build a business that can scale and survive. If you're planning on making chips, don't miss this critical episode that could shape the future of your manufacturing business.

Segments

• (0:00) Introduction to Episode 2 of the Machine Shop MBA series
• (1:12) Learn how you can grow your top and bottom-line with CLA
• (3:50) Introducing Nick Vargosko and Brad Boettcher
• (5:39) The importance of long-term thinking in business formation
• (10:02) Overview of what a Sole Proprietorship is
• (12:02) Breaking down LLCs and the different election options
• (15:30) LLC vs Sole Proprietorship: Which one should you choose?
• (16:35) Why you need to complete the Top Shops survey
• (18:14) What to do if you chose the wrong structure
• (19:07) The difference between S-Corps and C-Corps
• (28:02) When to choose a partnership (and why it might offer flexibility)
• (29:47) What do you need to do to change your structure? 
• (31:32) Horror stories when things have gone wrong
• (38:01) Why you need to check out Buy the Numbers

Resources mentioned on this episode

• CliftonLarsonAllen (CLA)
• Take The Modern Machine Shop Top Shops Survey
• Connect with Nick Vargosko on LinkedIn
• Connect with Brad Boettcher on LinkedIn

Connect With MakingChips

• www.MakingChips.com
• On Facebook
• On LinkedIn
• On Instagram
• On Twitter
• On YouTube