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Lawn RX 10
11-11-2010, 07:19 PM
Hey guys quick question!


I was a sole prop this year and did the whole 800 bucks a year thing for the liability insurance covered me up to 2 mil.....if i go llc would i even still need this since llc covers? Or would that only be for some crazy amount like if i put someone in a wheel chair? Any help would be awesome!

RodneyK
11-11-2010, 07:26 PM
You still need insurance it just changes from your name to the business name. An LLC is just another layer of protection. They are not magic bullets and the rules of road may make you personally responsible for an auto accident anyway.

Depending on your net worth a personal liability umbrella may be in order.

rreyn1812
11-11-2010, 07:28 PM
Forming a LLC does not necessarily mean that you are not personally liable for something. For specifics in your state, you should consult a lawyer to find out what applies in your particular case.

93Chevy
11-11-2010, 07:30 PM
LLC does not take the place of insurance.

It merely protects your personal assets if your business gets sued, provided you keep your business and personal assets separate.

Lawn RX 10
11-11-2010, 07:37 PM
Would you guy start out llc or sole? I wont be bringing in a ton of loot...

93Chevy
11-11-2010, 07:41 PM
There's no disadvantages of LLC over Sole Prop. except maybe slightly higher startup costs...depending on your state and with whom you file through. LLC is the way to go for small businesses.

yardguy28
11-11-2010, 09:47 PM
Would you guy start out llc or sole? I wont be bringing in a ton of loot...

from reading and posting on the various threads on this subject it seems to be personal preference.

i've been in this business for 4 year now and been a sole the entire time. i also plan on remaining a sole for as long as i'm in business.

others prefer to go the route of LLC. and like has already been said. it's another a layer of protection. not a majic bullet.

in my opinion if you don't feel you need that layer of protection i would remain a sole. but thats just my opinion. you have to do whats right for you.

if you seperate your business and personal assets and are concerned about those personal assets, from what i've read you might be wise to become an LLC.

Grass Shark
11-11-2010, 11:41 PM
LLC for you lawnrx

STL Cuts
11-11-2010, 11:55 PM
from reading and posting on the various threads on this subject it seems to be personal preference.

i've been in this business for 4 year now and been a sole the entire time. i also plan on remaining a sole for as long as i'm in business.

others prefer to go the route of LLC. and like has already been said. it's another a layer of protection. not a majic bullet.

in my opinion if you don't feel you need that layer of protection i would remain a sole. but thats just my opinion. you have to do whats right for you.

if you seperate your business and personal assets and are concerned about those personal assets, from what i've read you might be wise to become an LLC.


Idk about you, but for the minimal costs it takes to become an LLC, it is well worth it. Do you really want to have that liability by being a sole?

delphied
11-12-2010, 09:53 AM
An LLC protects ones personal assets better if you get sued. If you think that can never happen to you or you will not have anything worth suing for, maybe sole prop is the way to go.

yardguy28
11-12-2010, 04:52 PM
Idk about you, but for the minimal costs it takes to become an LLC, it is well worth it. Do you really want to have that liability by being a sole?

while i realize i could get sued i don't have anything worth suing for. so there is no point in me becoming an LLC. everything is tied up into the business. so if they sue the business they are actually suing me as well. i have one truck it is both my personal vehicle and my work vehicle. i don't own a house, boat, rv, etc. all my money is kept in my business accounts. very little sits in the personal accounts. just what i need to pay the bills i can't run through the business. which is only health insurance.

An LLC protects ones personal assets better if you get sued. If you think that can never happen to you or you will not have anything worth suing for, maybe sole prop is the way to go.

JohnBanks
11-13-2010, 10:10 AM
this was just discussed.

You incorporate for tax purposes first liability second. If you are grossing more than 40,000 a year incorporate. If you are not don't. You will save a lot of money on taxes if you have a great accountant.

wbw
11-13-2010, 12:03 PM
while i realize i could get sued i don't have anything worth suing for.

And you never will once they obtain that judgment against you. Just think about it.

soloscaperman
11-13-2010, 01:32 PM
LLC cost more upfront but you may end up paying less or more in taxes depending where you are at. Also as a LLC you have an extra shield of protection.

yardguy28
11-13-2010, 05:45 PM
And you never will once they obtain that judgment against you. Just think about it.

theres nothing to think about.....

i don't have any assests worth taking. becoming an LLC is not something i'm interested in because i have no need.

i'm not saying everyone should stay a sole prop. but for me it's the way to go.

JohnBanks
11-13-2010, 06:14 PM
What yard guy has failed to realize is that if he is making enough money it is stupid to do anything other than an s-corp. Don't be an LLC.

Also if you fail at bookkeeping having a s-corp is better for the fact that your numbers have to be more in order and you have to follow standard tax rules and stay organized.

If obama is in office much longer corporations will be even better because tax savings will be more.

yardguy28
11-13-2010, 06:22 PM
What yard guy has failed to realize is that if he is making enough money it is stupid to do anything other than an s-corp. Don't be an LLC.

Also if you fail at bookkeeping having a s-corp is better for the fact that your numbers have to be more in order and you have to follow standard tax rules and stay organized.

If obama is in office much longer corporations will be even better because tax savings will be more.

incorrect my friend......

i have considered and know ALL my options. sole prop is the one i choose and is the one i feel is the best for me.

for me it doesn't matter how much money i make.

what you guys fail to realize is all my money and assests are tied into the business.

the only assests i have are the equipment i use to run my business. i don't pay myself any money from the business. every cent goes into the business accounts. if i need a little money to put into my personal accounts to cover the one bill that isn't ran through my business i will write myself a check. thats another thing. all my bills are ran through the business. my truck insurance, my cell phone. i don't own a home so i don't have any of those possessions. my personal vehicle is my work vehicle as well.

so to those that say you need to protect your personal assests if you get sued. that doesn't help me. if someone sues the business and gets all my equipment those are my assests. no one can sue me for personal assests of any kind. i don't have a house and all that comes with a house. i don't have money in personal accounts. you will get nothing more out of me suing me personally than you would if you just sued the business.

JohnBanks
11-14-2010, 09:40 PM
As Stated and one thing u don't understand is tax benefits. Do u make 40,000 plus or plan to soon. Incorporate. If u want to pay bills out of business call them shareholder distributions and end the double tax.
Posted via Mobile Device

RodneyK
11-15-2010, 08:53 AM
I respect that everything you own is in the business. I also admire that you are trying to build something and are reinvesting in the biz.

In either case of an LLC or a sole prop if something happens then everything you have in the biz is probably going to be gone. This really dawned on me this past week and has me looking at things a little differently. Such as I have a couple pieces of equipment that I don't really use. That is just money sitting there waiting to be taken if something happens to the biz. It should be sold and a distribution made to me personally (I am set-up as an LLC with S-Corp status) that way it is out of the biz and the extra layer of protection applies. The next thought is to really be tight on what is kept and held by the business. Less in biz, more in my personal accounts. Aren't we really in biz to put money in our personal accounts?

Another example is that the space I use is owned by me via a separate LLC and leased to my lawn and landscape business. That way it is not an asset of the lawn and landscape biz.

My advice would be to separate the two out (personal and biz) with an LLC and take out as much cash as you can via payroll and distributions and put it away personally. With everything in your business and no personal assets what do you pay your bills with or start over with in case of an incident? If you need more money in the biz at some point then make a capitol contribution.

The other issue that may come up is that you continue as a sole and grow quite a bit, more than you ever dreamed. But, you are not operating as an LLC and it costs you more in taxes and could cost you everything. People become content with the current set-up and never make the jump to an LLC when they should. Before you know it something happens...

I can tell I am not going to talk you out of what you are thinking at this point and that is fine. But, at least review it from time to time and don't close the door on making the change. With this biz it really isn't if something is going to happen but really when...

yardguy28
11-15-2010, 10:03 AM
As Stated and one thing u don't understand is tax benefits. Do u make 40,000 plus or plan to soon. Incorporate. If u want to pay bills out of business call them shareholder distributions and end the double tax.
Posted via Mobile Device

what you don't understand is that when i said i understand ALL my options. i ment i understand EVERYTHING about all my options.

for my current situation sole prop is the correct choice. should something change i will review my situation and choose something appropriate for that situation.

I respect that everything you own is in the business. I also admire that you are trying to build something and are reinvesting in the biz.

In either case of an LLC or a sole prop if something happens then everything you have in the biz is probably going to be gone. This really dawned on me this past week and has me looking at things a little differently. Such as I have a couple pieces of equipment that I don't really use. That is just money sitting there waiting to be taken if something happens to the biz. It should be sold and a distribution made to me personally (I am set-up as an LLC with S-Corp status) that way it is out of the biz and the extra layer of protection applies. The next thought is to really be tight on what is kept and held by the business. Less in biz, more in my personal accounts. Aren't we really in biz to put money in our personal accounts?

Another example is that the space I use is owned by me via a separate LLC and leased to my lawn and landscape business. That way it is not an asset of the lawn and landscape biz.

My advice would be to separate the two out (personal and biz) with an LLC and take out as much cash as you can via payroll and distributions and put it away personally. With everything in your business and no personal assets what do you pay your bills with or start over with in case of an incident? If you need more money in the biz at some point then make a capitol contribution.

The other issue that may come up is that you continue as a sole and grow quite a bit, more than you ever dreamed. But, you are not operating as an LLC and it costs you more in taxes and could cost you everything. People become content with the current set-up and never make the jump to an LLC when they should. Before you know it something happens...

I can tell I am not going to talk you out of what you are thinking at this point and that is fine. But, at least review it from time to time and don't close the door on making the change. With this biz it really isn't if something is going to happen but really when...

thank you rodneyk....

i can better respect your advice than others on here because it is given in an "advise tone".

i do plan to review my situation from time to time and make sure i have chosen the best option for my situation. my current situation has be being a sole prop. and that is what i will remain until something changes that an LLC option would be better suited for.

the reason everything is tied up into the business is because neither my personal or business accounts earn me any more interest than the other. a long time ago before i started my business my bank set me up with high interest earning accounts that don't really earn much more if any more than the business accounts.

its just easier that way. i take all my clients checks and deposit them into the one account and i don't have to mess with checks for me. i keep just enough money in my personal accounts to pay for the bill or 2 i have that is not ran through the business. the rest are paid out of the business. i do from time to time write myself a check from the business but not on a regular basis.

i would guess if i got sued and lost i would be done for. i doubt the insurance i have covers law suits. so that would be the end of my business and lively hood. something i need to keep in mind as the business continues to grow.

WheatBookkeeping
04-14-2011, 07:16 PM
When changing from a Sole Propieter or Partnership to a LLC, let your bookkeeper know as soon as you get notice from the state that your LLC is approved. There will be some tweeks to your bookkeeping sytem needed but nothing that complicated. Keep in mind that your debt structure and licensing information will have to change.