incorperation befor contracts

Discussion in 'Lawn Mowing' started by 1stclasslawns, Oct 23, 2000.

  1. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    Hey there, to those of you who are incorperated I have a question.

    After searching the archives and finding no answer.

    I have bid several new apartments for next year, along with the ones I did this year. It looks like a sure thing, but, with the need to get incorperated befor I put anything in writing.

    Do you all think I would be out of line, and unprofessional to call and ask if I got the bids in the next few days?

    It will take a few weeks to get the incorperation papers through, and It is a January 1 through december 31 2002 contract. My accountant told me the inc. papers needed to be filed befor the contracts are dated.
     
  2. Mr.Ziffel

    Mr.Ziffel LawnSite Senior Member
    Posts: 291

    Are you saying that the apartments you are bidding on require you to be incorporated in order to do business with them? If so, I"m not sure why they would care what your business setup is, because incorporation protects YOU more that it protects them. Incorporation [there are several different types] creates a 'separate business entity' which means that you and the corporation are two different legal units and they can sue the corporation but not touch you, unless they file a separate suit naming you personally. In my state there are several additional types of business operating processes such as LLP, LLC, etc. A big drawback of incorporating, especially if you use the wrong process is that you get double taxed--the corporation pays taxes and then you have to pay tax on your income-your accountant can advise you on this.

    I'm not sure your accountant is the right person to advise you on the legal aspects of incorporation--although I hate to say it, it may be worth your while to buy an hour of an attorney's time--I know that when we set ourselves up it was worth the time spent with both of them. You may even want the attorney to read the paperwork from the apartments because again, it makes no sense to me that they care how your business is set up, just that you are properly licensed, bonded and insured.
     
  3. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    Mr Ziffel,
    I am not required to be incorperated as noone can make you.
    I have talked to my accountant and an attorny, they both told me that if I was going to be incorperated I needed to have it done BEFOR I made a contract with the apartment owner.

    I now have 8 of 22 complexes, if I am going to get all 22. I have to hire full time help and equipment for them thereefor the need for incorperation. But I must file for the articles of incorperation a few weeks befor I am to the contracts.

    So now do you see my question more clearly?

    Because if I make an agreement and am not incorperated I cant use any of the benifits of the incorperation papers in the first place.
     
  4. Exactly what benefits so you expect to recieve from a S corp. vs. a limited sole proprietorship?
     
  5. jaclawn

    jaclawn LawnSite Senior Member
    Posts: 490

    Let me get this straight. You want to INC before you sign the contract with the apartment, so that the contract in between the INC and the apartment. If you sign the contract before you INC, then the contract would be between YOU and the apartment?

     
  6. eggy

    eggy LawnSite Senior Member
    Posts: 954

    I would look at that twice, search about being incorporated I did a thread on this a while back......I decided it amounted to more paper work and little perks.
     
  7. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    I have searched and havn't found my answer.

    Yes I want to be incorperated befor the contracts are signed.

    The benifits? way less in self employment tazes
    legel protection just in case the inevitable happens. These are low income apartments federaly subsidised, and some one there, out of the hundreds of people, is just looking to sue sombody for what ever they can get.
    emploies

    to name a few
     
  8. Frankly Naturalawn if this is what your accountant and lawyer has told you I would fire them ASAP.
     
  9. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    Im with Lawrence on this one. Incorporated doesnt have anthing to do with hiring or insuring employees. Your insurance Co. that carries your insurance gives you the workmans comp insurance. As far as being incoperated to out fit your employees is another first for me, We are not incoperated we have employees they use the business equipment ect. We have our employees insured through our contracters insurance. As for incorporated I belive if your not incorporated and if your sued and your insurance company cant help (never heard they cant) can come after you. if you are incorporated they cant come after you your home or anything else. Better call the Better Business Bureo they will explain everything to you.
     
  10. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    ok I called my accountant, this is what he told me, by incorperating you keep more money in your pocket.

    for example and ease of understanding
    Lets say you make 1000.00 per month, self employment tax is 25%, so you have to send uncle sam $250.00 that leaves you with $750.00 not counting other taxes federal and state.

    By incorperating you make 100.00 per week SALERY less 1/2 of the self employment tax you pocket $87.50 YOUR CORPERATION pays the other 12.5%, yes, it comes out of the same pocket, but, now heres the catch. Every 3 months you pay yourself dividends amounting to the balance of what you would have payed yourself if you were paying yourself on a weekly basis. Dividends are not subjected to self employment taxes because they are a return on an investment.

    Figuring on a six month period of a gross of $6000.00

    By paying yourself $1000.00 per month for 6 months you you have in your pocket $3250.00 you have paid self employment taxes of $2750.00.

    By incorperating you have paied yourself $87.50 per week x 26 weeks = $2275.00 you have paid $325.00 yourself and the corp. has paid $325.00 on its part of the employment tax. BUT YOU HAVE GOTTEN 2 DIVIDEND CHECKS FOR 1487.50 or $2975.00. Resulting in $5250.00 in YOUR pocket.

    Thats $2000.00 more in your pocket rather in then governments pocket. All legal and protected by yours truly Uncle Sam.

    Or at least that is the way I understood him.

    Jim.
     

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