New Business Obstacles - what's a guy to do??

[ERICKS]

OK, I keep seeing threads where teens are moving into the commercial business world. That is great, I'm doing it to. But, I have been really hit with the real world. There are many areas of compliance that applies to the commercial world that just doesn't face a kid mowing yards.

Most commercial accounts require $1M business liability on the operation & automobile. $300-$500/year

My state requires a nursury dealers license if you stick a shrub in the ground. $40/year

If I want to spray roundup on weeds, that takes a State Pesticide Licence. $180-280/year

Of course there are city and county business licenses.

Oh Yea, once you consider all of this, you might still need a mower!!

I would strongly doubt if very many guys out there do. Except of course for the big or reputable firms.

Am I over reacting and trying too hard to comply with everything??

Do you think a minor needs that kinda insurance since I have no real assets??

Your thoughts??

Doug

[LoneStarLawn]

Quick reply...

The insurance is not only to protect you but to protect the commercial property that you are working at. I would say 95% of commercial properties require this insurance, so to answer one of your questions: Yes you will need insurance to work on such properties.

[lawnboy82]

i am not sure where you are from, but around here those arent the only problems we face. with pesticides now, if you pick up a TCI magazine, or Lawn and Landscape you will see how over by my house you must give 48 hour written notification to abutting properties. and even the wording to how you do that must be exact, or else you may be fined. fines over here can be, i believe up to 25K and hold jail time. then if you wish to dump any form of yard waste, you need a permit which can be 500 - 1000 a year. and then some. if you dont want to go for all the legalities right now, or if you cant afford them at this time. what i would say to you is at least become incorporated, and insured. because god forbid you do any kind of damage and you are not incorporated, anything you own, or that your parents own, may be taken from you. so you better watch out. being incorporated sets up a fake person who they would sue, if it ever became an issue. the key is though to keep your personal assets and the company's separate. because from what i hear on here if you mix things up lawyers will look for that and take your personal stuff after they have dried up the company's belongings.

[Guido]

If your going to do it like the big boys, do it right! This thread may help some of the kids around here realize how much a real LCO's operating expenses are and why they shouldn't lowball and undercut a legit companies price.

ERICKS, your on top of the game! Go with it and do it right from the start. You won't regret it. If you don't, your just hurting the industry. The little list you made up is part of the reason why one guy can charge $15 for a lawn when another has to charge $30 just to break even on the job!

[ERICKS]

Is all of the insurance, licencing and stuff very marketable?? In other words, will it help me get more jobs if I flaunt it??

[lawrence stone]

Lawnboy folks from Kansas don't have the ridiculous issues that plague contractors in the communist state of New York.

Your legislators have passed these laws so you get what you pay for.

I do feel sorry for the poor salt of the earth types that have to live upstate and deal with this nonsense.

If I lived in upstate I would state a petition to be separate state from all the dead weight that is NYC and Long Island with I-84 as a boundary line.

[Bob_McNaughton]

Wow apparently this business has changed since I was in it 13 years ago or so. I ran 20-30 lawns a week for 2 years and never carried any insurance of any type.

I wouldn't recommend this, as nowadays people are sue happy. But at the very least, set up a corporation to absorb any liabilities you might incur.

When I start back up next year, I will incorporate, I may have insurance, but I certainly won't be bothering with any licenses. It would assume all the LCO's running around my area now are not licensed in any way.

But then again, we are in communist type states like New York, California etc, like the other guy said. =p

[thelawnguy]

You list $820 worth of fees.

Working part-time, by yourself, after the first week you are now in the clear til next year.

[accuratelawn]

Bob,
You are going to the time and expense of incorporation, but you will not be licensed??
Not a good business plan.

[Bob_McNaughton]

Talked with a neighbor that works for the city, and apparently there are no licenses required for LCO people anyway. Makes sense, why the heck would you need a license to cut grass?


I avoid giving the man as much cash as I can, and rediculous fees and licenses irk me to no end.

[SLS]

ERICKS:

You are obviously thinking this through in a logical manner. You will be glad you did and I congratulate you for doing so. Best of luck to you! :)

As to your question:
"Is all of the insurance, licencing and stuff very marketable?? In other words, will it help me get more jobs if I flaunt it??"

My experience has been that this all depends on your 'Target Area/Market'. People with more disposable income (eg: rich folks) will go for the extras...especially if you come off as a pro during your sales pitch. They are impressed that you are able to replace that broken windshield on the Jaguar because you are insured also. :D

People with less "dough to blow" usually will only want the grass cut (every 3 weeks no doubt...)...so milking them with your fancy herbicides and licences and aerations is usually hard to do. :(

Study your chosen market and adapt your services around the potential need of your client base. You'll save yourself some grief and unnessary purchases if you do. ;)

Bob-Mc:

Although insurance has always been important in protecting yourself and your client is just seems to me that to even place a bid on commercial property the company wants you to show proof of having One Million Dollars worth of liability these days. These are usually "big dollar contractual" types who demand this so I guess that one needs "Big Insurance to play in the Big Leagues". I think its a good thing to have anyway...with blades whirring at 200 MPH a guy can't be "too safe".

Just what does it cost to replace some kids eyeballs these day anyway???

[yardboyltd]

Hey I feel for ya being a fellow Kansan. I'm 15 and pay tax but don't have insurance yet(next year). Look at these tax rates I use for my income level.


15% - Federal Income Tax - Single and income less than $26,250
3.50% to 6.25% - State Income Tax
15.3% - Self Employment Tax


Thats 33.8% minimum for me! Remeber Sales Tax that your customers are suppose to be paying! :) 6.9%

Last year I got all my Income tax refunded because I'm a dependant. This year should be about the same, I'm making a bit more. Also don't forget, you can deduct those equipment, licenses, permits, insurance, some taxes on your federal income tax.

Maybe I should live with my parents a dependant for as long as I can and just mow. :) Forget Harvard Business School

[GreenQuest Lawn]

I agree you should try to do it right if you are going to do it at all.

As far as the ins. I carry 300,000 and that is what i needed to get my business license for pesticide use.

Some places want a mil or more of liability but to-date I have not run into any.

Also pay for a good CPA they can help with deductions that can save you on them taxes.

My example;
I use Quickbooks pro, my CPA also has it in their office so if I have a question I can send them a copy or even e-mail a copy, They can switch things around the best way and simply send it back. I restore their copy and everything is where it should be.

They have also alerted me to things that the IRS flag when they see tax returns.

[CMerLand]

The issue of insurance isnt to get just enough to get whatever license, it comes down to the exposure and assets you need to protect.

Once your insurance policy is maxed out the lawyers then go after what else you have. So 300 K is good but if you have a judgement of 500 k better start packing cause you dont live there anymore.

Being Incorporated or an LLC doesnt give you blanket protection either. If you can be found to have been grossly negligent then they can go after your personal assets as well.

I just completed a snowplowing bid requiring increasing our insurance coverages from what weve had for years. The additional costs required for this were considered in the numbers that went into the bid. If we get the job, we buy the policy and the policy protects us and the property in the event of a lawsuit. Pay the tab and recover the costs, it really is that simple.

CMerLand

[Bob_McNaughton]

You can avoid the 15.3% Self Employment tax by going Corporation and paying yourself a salary w/deductions just like you worked for the man.

Saves a ton.

[LoneStarLawn]

Originally posted by Bob_McNaughton
You can avoid the 15.3% Self Employment tax by going Corporation and paying yourself a salary w/deductions just like you worked for the man.

Saves a ton.

Employers are generally required to withhold employment taxes (except FUTA) from their employee’s wages. The term, employment taxes, describes several federal, state, and local taxes that employers have the responsibility to manage. Some of these taxes apply only to the employer, some are levied upon employees, and some apply to both employer and employees. So inturn the business will sometimes have to match the employees taxes. Being corporated is not for everyone...

Half of the employment tax is a deduction

[parkwest]

What about:

FICA 12.4%

SUTA ?? Dpendant on state

FUTA 0.8%

Medicare 2.9%

[CMerLand]

To take Lonestars comment one step further, instead of paying the whole 15% yourself as a corp. you as the employee pay one half the tax and the corp pays the other half just as with all employees.

However, you then also have to pay workers comp and unemployment insurance for yourself and will be unlikely to ever collect on either of them, particularly the unemployment part.

You also then have corporate taxes that have to be paid to the feds along with the fed income taxes you take from the business. Talking to an accountant is the best way to find out how to best organize your business.

CMerLand

[thelawnguy]

Same pair of pants, just different pockets :cool: