becoming a corporation

Discussion in 'Starting a Lawn Care Business' started by twohonestlawnguys, Apr 12, 2005.

  1. twohonestlawnguys

    twohonestlawnguys LawnSite Member
    Posts: 2

    Wondering if any one had turned their company into a corporation. Insurance agent told me to become a corporation for cheaper rates.
     
  2. marko

    marko LawnSite Senior Member
    Posts: 963

    A lot depends on your tax situation and personal property that might need to be protected. Your best bet is to talk to a CPA. He will be able to tell you right away the best approach (INC, LLC, Sole Prop, etc.) Don't base your decision on insurance rates alone.
     
  3. CuttingEdgeLandscaping

    CuttingEdgeLandscaping LawnSite Member
    Posts: 14

    I incorporated to protect my personal property (home, cars, savings) if there is ever an accident and I am sued. At least that was the advice I was given.
     
  4. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,475

    that's a common misunderstanding... you can always be added to a lawsuit, as most are, especially if you are a one man show, or small crew.

    you should seek the advice of an accountant and attorney to set up a plan that clearly defines where your personal liability ends and the business begins. something as simple as using a personal credit card to handle day-to-day expenses can "pierce the corporate veil" and bring you into the world of personal liability.

    this is exactly why many business owners have their home in the name of an uninvolved spouse, which i do as well. and a good umbrella insurance policy is also a nice safety net.
     
  5. marko

    marko LawnSite Senior Member
    Posts: 963

     
  6. marko

    marko LawnSite Senior Member
    Posts: 963

     
  7. SoloMow

    SoloMow LawnSite Member
    Posts: 172

    My understanding from Business Law 101 is that the entire reason for incorporating is to shield you, personally, from liability. Example: If one of your employees, while driving an Exmark Hemi 2005A , careens out of control and smashes through the local McDonalds kiddie playground, your personal wealth cannot be subjected to a lawsuit. They cannot take your house, car, wife, or first-born child. :cool: That being said, always consult an attorney. They probably made a better grade in the class than me! :D
     
  8. JD Lawns

    JD Lawns LawnSite Member
    Posts: 3

    I agree with SoloMow, the way I understood my intro to law class was that by becoming a corporation you are not liable for actions taken under the name of that entity, the corporation. But that is a good point to be noted tonygreek, if there is a certain boundary that must not be crossed, such as not using a credit card for expenses.
     
  9. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,475

    jd, that's exactly my point. incorporating is not a panacea. i'd be curious to see how many people on this board have formed an inc to shield themselves from liability but do not follow through with their state's requirements (meetings/minutes, bylaws, directors, etc).

    Business Law 102 went in to quite a bit of depth on the veil... :)
     
  10. CuttingEdgeLandscaping

    CuttingEdgeLandscaping LawnSite Member
    Posts: 14

    I update my minutes with my lawyer. All purchases are made with a company credit card and all money goes to business banking accounts. I think I am going to take my name of our mortgage, like you suggested. I have thought about doing that for a while. Any other things I should do to protect myself?
     

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