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  #1  
Old 08-14-2005, 07:32 PM
leadarrows's Avatar
leadarrows leadarrows is offline
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Expanding my business concerns

I am currently expanding my business operations to include recycling drywall into a soil amendment by grinding the new construction trimmings into a granular powder. It will be sold to local farmers.
In order to have the room I needed for this operation I have purchased the family farm from my dad. I will now have the room I need to have a grinding area and temporary storage for the gypsum which is the product produced by this process.
What this means is I potentially have three businesses on my hands. My drywall scraps removal business that I have owned and operated for ten years and that is already incorporated. A drywall recycling business and the farm which will have 56 tillable acres. The farm is currently a row crop operation that I intend to convert to landscape products at some time in the near future.
My accountant has advised me that in order to limit my liabilities and the chances of losing all three companies at once in the event of a lawsuit. That I should incorporate the three companies individually.
The farm would lease the space to the recycling company that is required. The construction clean-up company would pay a dump fee to the recycling company. The recycling company will be the permit holder for the recycling operation and sell the end product to the farmers. The farm would be operated independently.
Now my question: My concerns are the costs of keeping all these companies separated. Would I need to pay separate workmanís comp for each of these companies? What about insurance costs? Would a general liability policy cover all three? But then if I do that how would it protect the farm from a lawsuit that say for instance the recycling company suffers. As of now my original company only has the 2 full time employees, consisting of my wife and me. However I can see the need for hiring additional employees in the near future. Getting the property purchased, closing costs and other expenses has left me cash poor temporally so hiring an attorney at this time is not an option. That situation will be remedied in the near future by the savings that will occur when I discontinue paying to dump the drywall at the land fill. My problem however is that I need to decide now about starting theses other companies because if I am going to do this I will need to file the incorporation papers ASAP. In addition to the incorporation paper work I will need Fed. ID numbers and all other related work that goes along with this. Separate bank accounts, Company name availability searches and such.
So I am hoping to get some preliminary advice and should I need to involve an attorney at some point I will do so then.
I have been thru the incorporation process before. I have computer software that I used to set up my existing company and it is easy to use. So I will be going that route again.
My question about the workmenís comp insurance is my main issue at this time. It would be a very costly proposition to be required to carry the same coverage on my wife and myself three times. Any advise would be appreciated.
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  #2  
Old 08-16-2005, 11:55 AM
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Team Gopher Team Gopher is offline
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Hi leadarrows,

I would think that if you had there separate companies, you are going to have to run them as the three separate entities that they are. I am sure it will be more expensive but I would think the benefit of that is they are individual entities which will provide you with the protection you desire. As soon as you can I would ask a cpa or an attorney for a professional opinion.
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Old 08-16-2005, 06:08 PM
farmerphilco farmerphilco is offline
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1) Why do you have work comp ins. for you and your wife? Do you have health ins.? Partners and officers are exempt from work comp. unless you opt to take it.

2) Can you have the drywall removal co. also operate the recycling operations as well?

3) Lease the building for $1/yr from the farm to the drywall co. This will help to separate the farm and business.

4) Make SURE that you HAVE a commercial umbrella policy that covers all entities.

5) No, there is not one policy that will cover all of these, this is where the umbrella protects you. Make sure that you have good products completed coverage.

6) Does the farm produce more than 2% of your annual income? If not you may not need a farm policy.
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Old 08-16-2005, 08:37 PM
farmerphilco farmerphilco is offline
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Also, regarding the farm, agriculture work is exempt from work comp. insurance.

If you believe that you are going to have occasional employees then you can buy work comp. with no one scheduled that will cover these temps.
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