View Full Version : Help! couple of questions please.

11-09-2011, 12:15 AM
Ok I don't know if I'm just excited or what but i wanted to get started getting ready for spring. So i looked into going and getting my business on paper.... so went to the county clerks office and went with sole proprietor ship. i also know i have to get a tax id #. i don't have the equipment but i have the money and accounts so i don't want to screw this up.
My Questions
~Was Sole proprietor ship was a good idea or no?
~I wasn't't gonna go to get a tax ID # till the first of the year due to me planing on me purchasing equipment till 2012. I didn't know if i did got my ID # this year would i have to do taxes on my business either tho it i haven't started yet. or Do i have to get it this year.
~How do you know for a fact that no one has your business name? -like i went to the clerks office and have documents saying i have ownership of my business name. but is there Anything else.

please help me. I'm worried I'm doing something wrong.
Your Help Is Greatly Appreciated

11-09-2011, 09:16 AM
Off the topic, but just wanted to post that I am folding up and going back to electrical job. I will be letting go of some almost new toys, trailer 6x14 with many goodies on it. Just bought much of this last year and this year . PM me if you need anything.

11-10-2011, 12:56 AM
Sole Proprietor is good for now and will be unless you grow a lot. Go ahead and get your tax ID number. Even if you have to do taxes, if you cant pay taxes on money you havent made. I am pretty sure that to have ownership of the business, the clerk would have done a search before they gave you the paperwork. Dont forget insurance, if your working for people on their property you will need general liability insurance. You might want to check your state insurance requirements, possibly 1 million in coverage.

11-10-2011, 12:31 PM
Thanks you both. JayD Ill keep the equipment in mind but dont look to buy anything until Feb. or March and i have a shopping list of what i want.
Phillie thanks for the answers. so i should go ahead and get a tax id #. i understand about the insurance. im just worried of things going wrong before it even starts.
Thanks you
greatly appreciated.

11-10-2011, 05:34 PM
Every state is different - sole properitership is fine for now as was said by phillie - if your operation grows, then incorporation might be in order as it allows you to be an employee of the corporation, and keeps the payment of other employees cleaner if and when you get there and decide to get a new corporate tax id from the feds.
I am not sure what tax number you are referring to as the one you already your ss should work as a sole P. If you are thinking of the resale tax number, I have found that unless you are doing a lot of resale stuff, it not worth the paper work.

11-10-2011, 05:48 PM
I would recommend sitting down with an accountant and discuss your situation with him, he can give the best advice for these matters. Not trying to dis anyone on here just trying to get you in the best position, your going to need an accountant anyway for advice in the future, might as well get him now while your getting started so he has the full picture of the business from the beginning.

11-14-2011, 12:30 AM
Thanks for the advice from the both of you. The number I'm talking about is the one that the government can identify your business from everyone else. its like a SS number for businesses. I was thinking i should. Could you give me a ballpark on how much one is. If you don't know that's ok. Ill find out this week.
Once again thank you for your help.

11-14-2011, 12:51 AM
I am not an expert on this but I am pretty sure as a sole proprietor with no employees there is no need to get a tax id number. You should be able to use your ss#

Edit: I just went back and the that "ralph" posted basically the same thing as I did. Again, I am pretty sure you will not need a tax ID number as a sole proprietor, but not 100% sure

11-14-2011, 01:01 AM
Thanks ralph02813 and JDiespstra. that works out. :)

JCLawn and more
11-14-2011, 04:55 AM
You get a tax id number when you get your Inc or LLC. When your just a dba you use your SS as your tax I'd number on your schedual c when you do taxes. Make sense?
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11-14-2011, 07:10 AM
JC you are correct and the reason is because that corporation is a differnet person under federal law. If you try to resell stuff and you state has a sales tax then you will need a resale number to avoid paying tax when you buy, but paying it when you sell.
You can get a federal ID tax number over the phone from the irs, you can do it now, if you are planning on incorporating with the next 18 months and run you business under it.

JCLawn and more
11-14-2011, 07:18 AM
another thing to remember is that if you go inc then if you get sued then your personal assets are on the line where if you go LLC then if you get sued they can only go after your business. I was a tax preparer last year, so thats i why I am only 20 and know haha. We did not deal with resale or sales tax stuff so I am in the dark about that. If you call the irs they can answer all your questions. They are not as bad as people make out.

JCLawn and more
11-14-2011, 07:26 AM
Now if you got questions on what is a deduction I can help with that too. One thing that most people don't know is that for fuel on your mowers you can file to get money back because of the road tax planed on the fuel. Its about 60 cents a gallon and all of that is refundable because we don't drive them on the road. I don't know the process because I use off road diesel which is not road taxed.

11-14-2011, 07:26 AM
jc , please keep in mind that if your incorporation is just a wall to hide behind rather than have insurance, there is no protection - incorporation is a tax tool not a protection device, unless of course your corporate liability has a seperated directors policy!

JCLawn and more
11-14-2011, 07:35 AM
jc , please keep in mind that if your incorporation is just a wall to hide behind rather than have insurance, there is no protection - incorporation is a tax tool not a protection device, unless of course your corporate liability has a seperated directors policy!

Thats just what my father always told me. He had a dairy farm and that is why he had LLC over INC. He said if your law suit is more than your insurance policy then you can loose everything. I could see this happening for snow plowing rather than lawn care though. Say if your pull a stupid and have 2 million in coverage and you damage a wal-mart parking lot and they sue you for 5 million to replace the whole thing, which I have heard of before. Yes i know its a tax tool. One guy I work for leases his own trucks to himself for tax deductions, don't know how that all works though.

11-14-2011, 07:55 AM
I think one of the best uses is to set up a full blown retirement fund, paid for with pretax dollars and, whatever you do - pay your social security taxes - i know guys that played for years hiding income there ss check is 1/2 of mine.

JCLawn and more
11-14-2011, 07:59 AM
I might not have SS when I reach that age haha They should be lowering ss tax by a percent or 2 this tax year.

11-14-2011, 09:42 PM
JC, LLC does not necessarily protect your personal assets. It does seperate the owner assets from the business assets. For example you et in a car accident in the company truck and it is your fault. The company can be sued as well as the operator of the vehicle. If you loose a big suit then they can come after your personal assets. Now if you have employees, that is where the protection comes in. If an employee causes an accident, your personal assets are protected if the company and the driver are sued, unless they can prove that you (the owner) were somehow liable. But more than likely if you are personally named in the suit the commercial policy will cover you.

As far as purchasing equipment before establishing the business tax wise it may be able to be done depending on where you live. Federal tax regulations alow you to transfer ownership for anything purchased within 6 months of establishing the business. For example I bought My truck, trailer and about 5k worth of equipment 3 or 4 months before I established my company. Once I established the company I had to sell those assets from my self to the company for tax purposes. I thought I would have to pay sales tax a second time on my truck but this regulation saved me from that.

11-14-2011, 09:43 PM
Also many banks require a federal Tax ID/Employment number in order to open a commercial account. Some vendors I use require one aswell to receive commercial pricing.

11-15-2011, 12:48 PM
I found this out the hard way for what it's worth but acquiring a EIN number without employees places you in a different light with the irs come tax time.
As long as you have acquired the necessary DBA (Doing Business As) paperwork from your county you will be able to open a commercial account as well as acquiring commercial insurance.
However, I heartily recommend you consult a local tax preparer in your area to discuss specifics unique to your state.

AI Inc
11-15-2011, 12:50 PM
However, I heartily recommend you consult a local tax preparer in your area to discuss specifics unique to your state.

best advice in the whole thread as regs vary from state to state.

11-22-2011, 05:26 AM
Yes. The IRS and state websites for tax info and DBA's etc. are detailed. Just a lot of reading, understanding and researching-my first season and Lives in Seattle, WA
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11-22-2011, 12:22 PM
I would like to thank all of you guys for your help. I have no worries about it now. Thanks.
Hope you all have a happy thanksgiving.