DBA or LLC ????

Discussion in 'Business Operations' started by Tuff truck, Mar 14, 2006.

  1. Tuff truck

    Tuff truck LawnSite Member
    Posts: 2

    I am starting my second season of my Lawn Care business. I want to go Ligit..... My question is what would be a better choice for me, a DBA or a LLC. I currently have about 10 customers, and charge between $40 and $ 65 per lawn. Can you please give me the advantages or disadvantages of each and any other advice you might have ????

    Thanks,
    Tom .... ( Wingdale NY )
     
  2. TheKingNJ

    TheKingNJ LawnSite Senior Member
    Posts: 781

    It appears that based on your question you may not have a clear understanding of what a DBA is. A DBA is more commonly known as a fictitious business name. A DBA is not a business entity, but just a method of legally doing business under a name other than your own as a sole proprietor. The primary purpose of the filing is to prevent fraud upon the public, not to protect your name, though its existence as public record may prevent new businesses from using that name as a practical matter, just as registering the related domain name may have some small practical effect in preventing others from using the name.

    A Limited Liability Company is what you want. No matter if you are a partner, sole proprietor or anything. A LLC will protect you from any lawsuits; nothing can come back at you only at your business. And there are no disadvantages of double taxation.
     
  3. CAG

    CAG LawnSite Senior Member
    from ct
    Posts: 344

    go with the llc... so your not going to pay any taxes for your 2005 season???
     
  4. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    LLC or S-Corp! Talk with a business lawyer or CPA to find out the best way to do it in NY (in reguards to taxes).

    DBA provides you with no legal protection. if you hit some kid with your mower and maul him you're SOL if you have no insurance. the parents will take every nickel to your name and any ounce of property bigger than a postage stamp. A LLC or S-Corp will provide a firewall between you and the biz and the customers. I would strongly suggest having a lawyer do it, because if every I isn't dotted and T isn't crossed the LLC/S-Corp will not protect you to the full extent of the law.
     
  5. Mower For Less

    Mower For Less LawnSite Senior Member
    Posts: 823

    Do not think that just because you file for llc status that you are 100% protected. There is a term called piercing the corporate veil (or shield). In a lawsuit, a skillful lawyer will tear apart an llc status apart if they wanted to. Really you need to gross more than 50K per year before incorporated status starts to even make sense financially. At you current customer base, I would stay as a sole proprietor, and just carry the liability insurance. Convert it over to an LLC or S-Corp as you grow.

    Kevin
     
  6. trackgimp

    trackgimp LawnSite Member
    Posts: 35

    Many law offices will assist you in filing minutes with the state and holding your annual meetings. You need to make sure that you are up to date on all of the necessary filings and meetings.

    The lawyers (from the plaintiff) will say that you are using the corporation to skirt liability (which of course that is exactly what you are doing :) ) but if your do everything by the book you should be able to protect your personal assets from any unfortunate business liabilities.

    Good Luck!
     
  7. Eclipse

    Eclipse LawnSite Bronze Member
    Posts: 1,149

    Kevin, you always seem to paint such a bad picture of an LLC :) They are not that bad. While I agree that an improperly setup LLC does very little but when properly setup they are effective shielding the officers.
     
  8. Mower For Less

    Mower For Less LawnSite Senior Member
    Posts: 823

    Its not that I think they are bad, they just should not be thought of as the end all to liability issues, or the perfect form for a corporation. They certainly have their place, but everyone here seems to jump right on the LLC bandwagon without any contrary opinion or regard for individual circumstances. Im not trying to bust anyone's bubble, just show both sides of the story. :usflag:

    Kevin
     
  9. BSDeality

    BSDeality LawnSite Silver Member
    Posts: 2,850

    I jumped on the llc bandwagon upon the stern suggesting from my lawyer. up here in the NorthEast everyone is sue-happy; you gotta protect what is yours.
     
  10. Eclipse

    Eclipse LawnSite Bronze Member
    Posts: 1,149

    That is because LLC's are not a corporation :)

    Using your arguement of a good attorney can "pierce the corporate veil" and poke holes in an LLC, this same concept applies to an INC also.

    One should also not automatically assume because they are an INC that they have absolute protection of thier personal assets. The same skilled attorney can "pierce the corporate veil" of an INC just as easily.

    Both, if setup and maintained properly (this is the key element), can and will protect your personal assets should the company be found liable for a tort.
     

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