How should my business be listed?

Discussion in 'Business Operations' started by chrisk, May 13, 2002.

  1. chrisk

    chrisk LawnSite Member
    Posts: 35

    Just getting started and I wanna do this right.
    What form of BUSINESS do I need to be??? It's just me.
    Maybe later on I'll hire some help.
    I have heard that with a sole proprieter if you get sued you can lose your house and belongings. What should I do??
    LLC maybe??????
     
  2. Dennis E.

    Dennis E. LawnSite Senior Member
    Posts: 349

    I'm a sole proprietor and in my 14 years I've never had a problem.Get the proper insurance. Thats where your protection is at.
    My liability is at a million. The inc. does not always protect you.
    The insurance does.
     
  3. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    heres a point of view from a 20plus years in the insurance biz guy...stay a sole proprietor until you have enough business to justify the time and cost needed to be a corporation or partnership....and please HEAR me on this next point....NEVER, as a sole proprietor allow ANYYONE to operate your equip or hand held power tools......you can get a million dollar limit plus ins for your truck for around 1200 per year.....but if you bring people ....anyone....on your job site and they run over someone's kid or worse...you WILL lose your personal assets as the ins policy covers only YOU......trust me on this one.....play by the rules and you will be ok as a sole prop.
     
  4. Dennis E.

    Dennis E. LawnSite Senior Member
    Posts: 349

    My CRS is acting up again.
    A great point that I TOTALLY overlooked.:rolleyes:
     
  5. lawnstudent

    lawnstudent LawnSite Senior Member
    Posts: 472

    A sole proprietor does not limit your person liability even if you have insurance. An LLC is not as difficult as incorporation and it limits your person liabilty to the investment in your comapany. Income is treated in a simular mannar for sole proprietor and LLC. Check out your state's business web site, they should explain the diff.

    jim
     
  6. Cutting_Edge_Lawns

    Cutting_Edge_Lawns LawnSite Member
    Posts: 32

    Our company is set up under a chapter-s corp, often called an s- corp. It is taxed very similar to an llc or partnership in that there is no self-employment tax, and the company is not taxed on its earnings, instead the profit the company makes is divided according to shares of ownership and listed on your personal income tax. You still pay the normal individual taxes, but avoid the corporate tax and the self-employement tax. Here in Oklahoma, I was able to set up my corporation for a $50.00 fee paid to the Secretary of State, and about 4-5 hours of paperwork for the state, IRS, and the Oklahoma Tax Commission. Well worth the time, IMHO, as it protects my personal assets, while limiting my tax liability. Hope this helps.

    P.S. If you incorporate in your state, the form you fill out to elect to be an s-corp is an IRS 2553 form, which must be filed w/in 75 days of your incorporation to be valid for that year.


    Shawn
     
  7. TGCummings

    TGCummings LawnSite Senior Member
    Posts: 773

    Yes, but can't you simply add an employee to your liability coverage?
     
  8. prairie

    prairie LawnSite Member
    from kansas
    Posts: 115

    Yes you can, but then you might have to look into disability and some other coverage you don't really want to pay for. We're a LLP , and have 1 million in coverage in Kansas for about $350/year. We have 0 employees. This makes it easier and our employees pay taxes from their own pockets every quarter.
    Just so they don't get a big hit in April
     
  9. Cutting_Edge_Lawns

    Cutting_Edge_Lawns LawnSite Member
    Posts: 32

    Although I am not a sole prop, this one concerned me a little, so I checked with my ins agent, he informed me that on a corp, all employees on payroll covered, on sole prop, same deal. Only complication would be if a sole prop (or corp,llc, partnership, etc) was not doing legit payroll, he thought they would consider that person a sub-contractor (or at least not an employee), and therefore not cover them or their actions.

    You might want to check with your agent on specifics, mine is considered a "blanket policy" which means it will cover employees, vehicles, equipment, etc from the day obtained, not the day ins agent is notified of acquisition. This also means it covers all employees on payroll.

    Hope this helps.

    Shawn
     
  10. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    I'm of the similar understanding with Cutting Edge Lawns - A SP status does not limit you in your work by not being able to let employees use your equipment. Your general liability insurace protects you against their accidents and your WC insurance protects you/your customer if they get injured.

    A SP doesn't gain additional exposure by having employees operate your equipment. Your additional exposure from liability comes from if someone sues the company, you're not protected by the "corporate veil" that a S-Corp, LLC, etc. affords you. You can do things to "pierce" that corporate veil if you're incorporated, so becareful about how you represent yourself when you are acting on behalf of your corporation.
     

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