Differences when forming your biz

Discussion in 'Lawn Mowing' started by Guido, Aug 29, 2000.

  1. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    Hey guys, as others have said, not to many people in the industry are very educated on the business side, which in most places today is just as important as the trade side. Lets try to find the advantages and disadvantages of the common types of business set-ups available. I think we can all learn something from this, and give the new guys some guidenance when they decide to jump into the industry.


    The following is what I THINK I know, but I'm not 100% sure, so lets pick brains. Hopefully this won't turn into a shouting match again!!


    SOLE PROPRIETER

    ADVANTAGES- YOU get to retain all profits (no partners or investors)

    Easily formed and dissolved with little or no legal fees

    Flexibiblity - no arguing with partners or investors


    DISADVANTAGES - UNLIMITED financial liabily including personal assets

    Financing limitations




    PARTNERSHIP

    ADVANTAGES: Easily formed

    More finance posibility ( 2 investors rather than one)

    NOT SURE IF THIS ONE IS TRUE BUT... I understand that each partner is only liable for what he or she put into the business in case of a lawsuit or claim. Its harder to tap into their personal assets. Thats why you see a lot of sielent partners ( a wife or child or parent usually).


    DISADVANTAGES: Still have some financial liability personally

    inter-biz conflicts with partner

    hard to disolve biz

    harder to manage and agree on ideas



    CORPORATION ( don't know much about this at all, but heresd what I THINK i know!) :)

    ADAVANTAGES: Very limited financial liability

    expanded financial capicity ( you can have investors)

    Necessary for many gov't contracts now



    DISADVANTAGES:

    difficult and expensive to set up and disolve

    tax disadvantages

    legal restrictions are very costly!!





    Hope this helps, lets get this going guys!!

     
  2. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    You left out L.L.C.. Also, there is more than one way to incorporate.
     
  3. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    I didn't say I was going to teach a class on it, I told you what I know, if its even all correct? I was hoping people like you that know different or more ways can share your knowledge with others!! I've seen LLC a lot but don't have a clue really.

    Guys please add all the info you can here so we can see the pro's and con's of all of them.

    Thanks in Advance

     
  4. Scraper

    Scraper LawnSite Bronze Member
    Posts: 1,656

    There's also an LLP (Limited Liability Partnership). Supposedly limits a partners liability. Not a lawyer, so I don't know what else it's good for. :)

    Guido...Instead of posting here so much why not read up on this and report back with a full report. I'll give you 2 weeks. :) Maybe you can give Nilsson a run for his money when you get back or better yet go to law school and then you can represent all of us on corporate matters. :) Kidding!
     
  5. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    Just for you!! :)

    I did a little more researching and heres some more info for ya'll.

    LLC ( Limited Liability Company)

    *Allowed in 47 states
    *It allows for the corporation advantage of limited personal liabilty while avoiding the double taxation of a corporation
    * It resembles a partnership agreement, except that it greatly reduces each partners liabilty for the actions of the other owner(s)




    RICHARD MARTIN

    "C" or Regular Corporation

    *make profits which go to pay owners, reivesting in comapany, and pay corporate income tax. Then the owner (who got paid from the corporation) has to pay personal income tax. (looks like you take a screwin!!) This is what they meant in LLC where you get double-taxed.


    "S" or subchapter corporations

    * can pay taxes like a partnership, (only once) while being able to keep the limited personal liability limitations like a regular corporation


    Most american and Canadian business use "Inc." to show they're incorporated, but (as perferd by European businesses) you can use "Ltd." to show limited liabilty by being incorporated.


    Okay, go ahead, throw another one at me!! :)

    I hope this helps someone, and I'm hoping to learn more out of this in the end to when others start to contribute. Lets hear the pro's and con's on these setups.

    :)

    Scraper, your right, we need to invite a lawyer here for some question and answer sessions!
    I'll see what I can do! :)

     
  6. BRL

    BRL LawnSite Bronze Member
    Posts: 1,211

    Do a search! There was a good thread on this subject not too long ago.
     
  7. Guido

    Guido LawnSite Silver Member
    Posts: 2,085

    Come on guys......nobody has a business out of 1300 of you on here? Lets try to debate the differences on this subject.

    BRL I know there was a post on this a while back, but it was just an argument.

    Well, can't say I didn't try!!

     
  8. eggy

    eggy LawnSite Senior Member
    Posts: 953

    Guido I have tried posts on this subjuct because I will be the first to admit I can learn from more buisness skills. Nobody here seems to want to post on this subject...I am thinking to Inc next year but I am not sure....Now I use equity in the home as nmy buisness capitol...thats kinda scary when you think about it. I want to have my buisness completly seperate from me. Write myself a weekly paycheck etc.
     
  9. eslawns

    eslawns LawnSite Senior Member
    Posts: 712

    Spend $50 bucks and talk to a lawyer. Most people think that forming a corporation will protect your personal ***ets. That is true where it concerns the actions of your employees. No form of business will protect you and your personal ***ets from the things that YOU personally do. Not much benefit in being Inc. until you have a few guys working for you. Check it out with an attorney and possibly a CPA.
     
  10. machine

    machine LawnSite Member
    from OH
    Posts: 101

    A lawyer or CPA is going to tell you want you want to here. You guys are going to have to do your own research on which enty is best for you. Read between the lines because the law is gray and many standards of accounting are not writen in stone. I simplize with guido, who started with this thread, because I tried many times to get quaility discussion on this topic. I guess, no lawyer or accountant wants to give some simple free advise. Whats wrong with double taxation? Run the calcutations, Who pays more in tax, the Individuals or the Coporations? Its the Individuals, Dillweed!
     

Share This Page