Business decisions and advice

[Island Lawn]

This is an update from a post I made ont the "quickbooks users" string but is more than that, so here's a new string.

I went for an initial consultation with Ms.Jane Doe,CPA/Cert. QB Advisor. Upon entering the posh office bldg, I was (intercepterd?) by her boss. I was (flattered?).

I had two goals
1) Get financially organized.
2) Register my business name w/ state.
#2 was the problem. In SC, a sole-prop can't register. Therefore, at any time, a partnership, or corp that registers the name I am DBA, then I have to give it up.

Bossman told me in order to register as a sole-prop, I have to become a Limited Liabilty Company.

After some research, I began to realize what an expensive and endless beaucratic procedure it is. I have yet to figure how this supposed to be more appealing than full blown incorp.

I was ready for a second opinion.

I got one Jane, she was so much more understanding. She took the time to find out exactly what I was looking for. I'll be seeing more of her real soon!

I am staying sole-prop. Keeping it cheap and simple!
Jane is going to get my financials straight (she won't stop there)
The name thing is a pain!
Opinions sought for the following:

Mr. Jane Doe
Lawn and Landscape Service Provider

Seriously, If I use my name as my business name, I increase the odds that no one will register it out from uder me.

[Edited by Island Lawn on 01-23-2001 at 10:48 PM]

[LoneStarLawn]

DBA can still be obtained by sole prop. It is done through the county...

All businesses operating in Texas as limited partnerships, registered limited liability partnerships, limited liability companies, corporations, professional corporations, nonprofit corporations, and professional associations must register with the Secretary of State.

General Partnerships and Sole Proprietorships (when using name other than owners name) must file Assumed Name Certificate (DBA) with the county clerk.


This is in Texas. May be different elsewhere.


[Edited by LoneStarLawn on 01-24-2001 at 12:16 AM]

[65hoss]

1st off, no one can make you change it if its your name. That is the one great thing about your name. Don't give up the sole prop. status. Its the last great tax break.

[1st impressions]

We C-Corp'd 3 years ago on advice of our c.p.a.. We are not as large of a company as others on this site but we did it for the following reasons:

1)Red flag to the I.R.S. when more than $100,000 in gross revenue is "flowing through" the company to the owner.No one needs an audit headache!

2)Legal name that no one can take.

3)Additional write-offs

I will go into #3 with additional details. The cost to file the paperwork with the state was approx. $600. (Office Depot has the forms for $10.00 if you want to do it yourself.) We pay our accountant approx. $1300 a year for our quarterlys, corporate year end, and personal income tax return. That may seem like a lot to you but it gives us peace of mind.
One write-off we get is with medical. We are able to write-off 100% of the insurance premiums and 100% of our out-of-pocket. Last year that was about $7500. Tax savings paid the accountant.
Another write-off was the work vehicle.If you purchase a truck , you can only deduct about $3000-$3600 a year.(check with accountant)My payment is higher than that. You can fully deduct a lease payment but I would not recommend leasing because you will be on the hook for ANY damage and the dings and scratches WILL add up.Believe me, I know.
As a corp., I personally buy the truck and lease it to the company
Many other reasons, too numerous to mention here.



P.S. Can't believe I forgot the most important benefit. You
limit your liability exposure.

[LoneStarLawn]

Those writeoffs we use as a general partnership. We lease our trucks and as long as when the lease is up and we are getting into a new one no charges are given to us. I guess we are got a good salesman that we work with.

[kutnkru]

Here in NY it will cost $25 to register at the clerks ofc.

Here are some examples of how contractors locally use headings:

Plant-It Earth Landscaping (or-Landscape)
G&D Lawn & Landscape
Stihlman's Lawn Care (or-Lawn Service)

Hope this helps.
Kris

[Mueller Landscape Inc]

Hey 65hoss,

How is being a sole-prop and great tax break?

John

[Island Lawn]

I talked w/ a local judge about registering my DBA name.
I came away with the understanding that I can DBA, all I want. No registration required, or accepted!

They told me the same thing at the state sect. office.

I'm going to ask my CPA about it ASAP.
I could be confused. Any body else ever here of this?
Anyone from SC?

[LoneStarLawn]

Read my post ....More and likely its the same in every state.

[65hoss]

As a sole prop. you get to write off expenses that you wouldn't normally. You personally can write off the use of your personal truck in your business. The profit is taxable at your marginal tax rate only once. You heard of double taxation? There are several other tax issues that fall into this catagory. You don't have all the regulations and paperwork issues to deal with.

[Runner]

Island Lawn, So let me get this straight. You are going to ask your C.P.A./Q.B.A., who probably has an M.B.A., about a D.B.A. A.S.A.P. So that the I.R.S. wont turn you in to the F.B.I. or the C.I.A. as a M.I.A. In which case you'd PROBably end up at a K.O.A., or even worse yet, a D.O.A. and you want to know if anyone is from S.C., right?

[Edited by Runner on 01-24-2001 at 09:49 PM]

[Mueller Landscape Inc]

Hoss,

I get reamed every year with that self-employment tax. I hear there are ways around it with a corp. I am going to look into it this year.

John

[65hoss]

As the owner of sole prop. you have no withholding when you get paid. Your employees do. The self employment tax is basically the same thing for owners. You will pay this regardless. If you are a C corp (maybe S corp) you will be an employee and withholding will be taken out. So either way, you pay. FICA taxes for the owner are less than other legal forms of operations, for example partnerships and corps.

[Mueller Landscape Inc]

Hoss,

I understand all that. I heard that rental income is not subject to that self-emp tax. If the corp rented the property from the owner then the owner's rental income from the property isn't subject to that type of tax. These type of legal loopholes could make a differance. As an owner, I can draw whatever salary I desire, that being a low paying salary. I could make up the rest of the income from renting.

Just a thought. I know someone who does this to some degree. I need to get the details.

John

[LoneStarLawn]

sole props and general partnerships are the same in taxes. Just have an extra form (1065) to fill out due to having two or more owners.

[Island Lawn]

Checked with my CPA today.
No DBA form to file.
Just pick a name and go...

I'm having a very REAL commitment problem with deciding on a name.

[LoneStarLawn]

Businesses that use a name other than the owner's must register the fictitious name with the county as required by the Trade Name Registration Act

[Island Lawn]

I have talked to the sect. of state's office, My counties circuit court judge, a couple of insurance agents, my banker,...

Lonestar, What you are telling me is what I believed when I first called my sect. st. office. Its been a wild ride since then!

Its been a REAL PAIN!

I'm a college grad and am pretty good at basic comprehension of spoken english (& some Gullah)!

These people I have approached about this strike me as pretty good at speaking.

But, somehow, there seems to be a communication problem.
Probably on both ends. I wonder if they take a solo LCO seriously enough to here the question.

I appreciate all the help with this!
Sure is a pain in my business

[LoneStarLawn]

I did some research on it through SC websites and got alot of run around. Doesn't really say that you need one, but common sense tells me that how will you pick a name that hasn't been take? Kind of a wild one...Wish someone in SC would speak up and really let Island Lawn know. (I'm almost sure you need one...but I think you want solid proof)

[Bluegrass Lawn Service]

It's my understanding that S-corp is the way to get the most from your business. If you have employees that can damage other property or they are driving you trucks to and fro. The chances of you getting sued is greater and the s-corp will help protect your personal property. Maybe not a 100% but better than you have now as sole owner.
Under s-corp you take a salary which you will take out taxes just like the employees you hire. The money that is left you don't have to pay taxes on it and you can pay yourself dividens from time to time. This is the only way I know to get any kind of tax break and protection.

[R&GSweeping]

Hey Island: I'm from SC and I own 4 different business's. A computer programming company ("C" corp.), a vending company (sole prop.), a parking lot sweeping co. (sole prop) and a video business (sole prop). In picking a business name, except for the corp. which is registered in SC, I do this: use your name in the business. For instance my sweeping business is R&G (Ron and Gayle) sweeping. Or use your city (ie Pawleys Island) in your name. After you pick a name do this, call directory assistance and see if any other business in the state has your new name. If you stay a sole prop. you can and should register your name with the clerk of court for Horry county (or is it Georgetown?). That will safeguard your name in your county. Now you are correct in saying if a corp. comes along and wants that name in SC you do not have a legal leg to stand on. BUT most of the time a corporation is not going to pick a name that someone else is using. Too much of a legal hassle. One last word on corporations: I would talk with an attorney about the liability issues associated with sole prop. and see if a corporation (especially "C" corp.) could shelter your personal assets in case of lawsuit. Hope this helps...

Ron

[Island Lawn]

Hey Ron,

Thanks for the tip. Sounds like you've got some background in this sort of thing.
After so much phone jocky, I decided to put the name issue on the back burner and just go with what I used last year: George's Lawn Service.
They will be writing the check to me anyway.
I have a seperate personal acct for business and all checks deposited have to be in my personal name.
So goes my logic.

Sole Prop is definately where I am staying for now! I'm trying to keep it simple.
I will, again, try the County Clerk of Court (Georgetown) for registration information.

Thanks, every one, for the info.