Differences when forming your biz

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

  1. tslawn

    tslawn LawnSite Member
    Posts: 39

    I was a paralegal for 11 years until I did this. Basically, and no, I don't know what a lawyer knows, but...incorporating does shelter you somewhat from lawsuits from customers, i.e. in case of injury and such. But a good liability policy should protect you in such cases. But, even if you incorporate, you still need credit from your vendors. You will still need to sign a personal guarantee on any credit your company extends. If you default, you will be sued along with your company. And if the Court finds that you defaulted and owe the money, you and your company will get a judgment against you. If you incorporate or don't incorporate and one of your employees majorly screws up, you are responsible for them and their actions and thus can be sued personally along with your business. As far as taxes are concerned, if you're incorporated, you must pay yourself a salary and you will be taxed. If your company makes a profit, the company must pay taxes on the profit money. So...What's the difference in being self-employed? I myself am self-employed. I don't pay myself a paycheck but I do pay self-employment taxes and pay taxes on my profit. so what is the difference? 1/2 dozen or 6 of another I say.
     
  2. paul

    paul Lawnsite Addict
    Posts: 1,625

    Have been all three, Sole Propriter, A Partner and a Corporation. No single one is perfect, all have advantages and disadvantages. Sole Propriter easier to do taxes easier to sue, partnerships probably the hardest to run and workout tax wise and business wise, corporations hard taxes filling and more reports to fill out, easier for you to make out your taxes. As for being sued not so much the cost for claims but cost of defence from claim, see a corporation can pay for stock holders defence or an officers defence, for a officer to be sued plantiff must show reason for suit and cost is big dollars that he must pay limits problems of smaller suits.

    Question I have is how many here think that a lawsuit is going to be their biggest problem?



     
  3. eslawns

    eslawns LawnSite Senior Member
    Posts: 712

    Machine,

    Lawyers and CPA's are bound by law to tell you the truth. Of course, not everyone scrupulously observes the law. BTW, do you cut lawns free? Why would a lawyer give "free" advice?

    Guido

    Noone can answer all your ?? here. Things will vary a great deal from state to state. I know for a fact that Inc. will not protect you from lawsuits. I know a plumber who left his keys in his truck. It was stolen and wrecked. The victim sued his business and him personally and won a huge settlement. He assumed he ws protected by incorporations. Remember this: when people sue, they sue where the pockets are the deapest.
     
  4. southside

    southside LawnSite Senior Member
    Posts: 790

    Over here in Oz we have:

    Sole trader: (me)

    Partnership: up to 50 partners.All partners equally liable for debts.

    Proprietary Limited Companies: These may be listed on the stock exchange or unlisted.They are run by a board of directors.The board of directors is liable personally for
    debts.If the company goes into liquidation the Australian
    Securities Commission can hang them out to dry.

    We don't have Inc companies here.

    Karl
     
  5. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    The administrator should edit posts that are blantantly false or wrong.

    This sites getting bigger - great - but the amount of BS diminishes it's credibility.
     
  6. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    With all due respect, Lazer, your opinion isnt the only correct one. I will say, this thread is all over the place, and the different replies is surely incentive for one to do their own investigating.

    Dont forget, also, rules for SP/LLC/LLP/etc vary from state to state. What works in CA may not cut it in CT.
     
  7. Marquis Lawn

    Marquis Lawn LawnSite Member
    Posts: 21

    My biggest reason in organizing an S-corp is the liability issue. As my personal assets increase, and our biz adds more employees, our chances of lawsuits increase as well. We carry liability insurance on the biz, of course, but the S-Corp protects us from anything above that. Suppose, God forbid, one of our employees plows into a schoolbus full of kids. After the insurance runs out, then who do the parents sue? The $8/hr employee, or the biz owner? Exactly. An S-Corp limits my liability to what I have in the biz, and nothing more.

    Other benefits are of tax issues. If you have a good accountant, and play your cards right, then the S-Corp is THE way to go in the tax arena also. You have much more control over your tax life as a corp.

    That's my two cents on the issue.
     
  8. Lazer

    Lazer LawnSite Bronze Member
    Posts: 1,446

    lawnguy,

    This has nothing to do with opinion. The laws are the laws. Of course they vary from state to state, but your opinion of them doesn't change them.
     

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