Is an LLC needed?

Discussion in 'Business Operations' started by Sonshines, Sep 16, 2013.

  1. Patriot Services

    Patriot Services LawnSite Fanatic
    Posts: 12,532

    You're right. A properly set up corporation with a reasonable amount of insurance is the right way to go. Your legal, can sleep at night and always have the option to fine tune the machine as you grow.
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  2. Sonshines

    Sonshines LawnSite Member
    Posts: 19

    Thanks everyone for your input. All opinions are valued. I have had some (including the Sec. of State) suggest I ask our accountant. Since it is just hubby and I just getting started (lawn mower/whacker with plans to get a few more items), we are our own accountant. Today, we sent in our M/O to Sec. of State for our legit business name, and should things take off and need the LLC, we will go that direction. For now, being so small, hubby will be talking to our insurance company on other options.

    Thanks again....
     
  3. TTS

    TTS LawnSite Senior Member
    Posts: 615

    The first post I quoted is spot on. An LLC does personally protect you somewhat. When you're at the point that you have employees if they run someone over on the mower, with an LLC the person can sue the employee and they can sue the business (if the person violated a business policy you're kind of safe but lets pretend you're not). As long as you didn't personally tell your employee to run that person over your personal assets are safe. Had you told the employee it's ok to run people over then your personal assets are up for grabs when you personally are named in the suit. If it's just you and hubby no matter what the incident is your personal assets will be up for grabs.

    The other thing that was mentioned in this thread is credit and bankruptcy. With a DBA if you use credit and the business goes bankrupt your personal assets are up for grabs. An LLC will protect a portion of your personal assets from that claim.

    As always a CPA familiar with local laws and taxes is the best to answer this question but in general a family business with no debt there is no reason for an LLC. Once you start hiring employees or using credit some sort of separation (LLC or corp) will protect your personal assets.

    The post mentioning employee meetings with minutes etc only applies to corporations to the best of my knowledge.
     
  4. Liberty Lawnworks

    Liberty Lawnworks LawnSite Member
    Posts: 133

    Your post was spot on. With regard to meetings with minutes, multi-member LLCs should have these along with a charter.
     
  5. CL&T

    CL&T LawnSite Senior Member
    Posts: 493

    True except creditors are wise to this and will require a personal guarantee which puts your personal assets on the line. Sometimes if the business has been established a long time and has an excellent credit history they will let you sign in the name of the company. But don't count on it unless it's for a low credit limit. And if you are a new company it has no credit history, so the only way to get credit is in your name. So now you are back to the same as being a DBA.

    Big mistake! Not to be rude, but if you are asking these kinds of questions you really do need professional input. Do you know anything about the required record keeping, sales tax, setting up a business checking account and how it should be used, determining your net income and filing the proper tax forms at tax time? You don't have to have an ongoing relationship with an accountant but you do need one just to get you set up properly and keep you out of trouble with the IRS and state. The one time expense is money well spent.
     
    Last edited: Sep 19, 2013
  6. TTS

    TTS LawnSite Senior Member
    Posts: 615

    Yes, in a way creditors look at the business the same as a person. When you're first starting out it's not that you have bad credit it's that you have no credit, just like a young person starting out on credit. By putting your personal name or the names of your partners on the application it's pretty much the same as being cosigners on the loan for a child. With time and good use you can raise your business credit score to be able to acquire credit in the sole name of the business. Also at a certain point you can sometimes use business assets to guarantee credit.
     
  7. Sonshines

    Sonshines LawnSite Member
    Posts: 19

    We have a CEO accountant (Our yearly tax man) just not a "personal" accountant. I have set up a business bank account before (in the past). We also have worked with livestock 20 years (we had over 10 acres) buying/selling. So I think we will manage lawns vs cattle. =) Just making sure we have all corners covered.....
     
  8. Sonshines

    Sonshines LawnSite Member
    Posts: 19

    Decided to go ahead with the LLC---just in case....
     
  9. RussellB

    RussellB LawnSite Fanatic
    Posts: 6,027

    Smart move in my book. best of luck to you and I hope your business thrives.
     
  10. Sonshines

    Sonshines LawnSite Member
    Posts: 19

    Thank you, and I hope yours does well too!
     

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