Llc, Incorporated

Discussion in 'Business Operations' started by JACKSONBRIT, Nov 24, 2002.

  1. JACKSONBRIT

    JACKSONBRIT LawnSite Member
    from ALABAMA
    Posts: 7

    Hi All,

    I am a owner operator of Montgomery Lawn Service in Huntsville Alabama, I would like to know a little more about being incorporated, the benefits, pros, cons and the requirements.
    Thanks.
    Johnny
     
  2. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I went from Sole Proprietor to LLC last January. An attorney can explain to you the benefits in no more than 1 hour. I would strongly suggest you see one to find out if this is the right path for you to go.
     
  3. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,835

    I have a good friend who recently graduated from law school with honors and is now working for a top law firm on the East Coast. I asked him not to long ago about this and below is the text of the email he wrote back. You may find it interesting. (Keep in mind, this was a discussion among friends so his lingo is a little loose :)
     
  4. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Jim,

    I agree with most of what your friend had to say...other than using the "do-it-yourself" kits and saving a lot of money.

    I tried it that way first. Big mistake. Why? These companies on the internet who say they will form the LLC for you DO NOT offer legal advice. I wasted a couple of hundred dollars because I thought in the off-season I would form our LLC by myself and use one of them. Duh.

    Sure, they do the name check for you and perform the filing with the State and Fed, but that is about it. They can't tell whether a LLC is right for you...only an attorney can.
     
  5. benjamin

    benjamin LawnSite Member
    from MI
    Posts: 7

    An LLC is an entity recognized on the state level. For tax purposes an LLC is the same as sole proprietorship unless other designations are chosen.
     
  6. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,835

    I agree with rodfather. I wouldn't use a kit either, even though my friend recommended it. I think it's safe just to pay an attorney a few hundred $ to be sure it's done correctly.
     
  7. wemolow

    wemolow LawnSite Member
    Posts: 9

    I'm a little slow on this. There's repeated mention of LLC.
    What does it stand for and is it under sole proprietorship, partnetship or corporation? Is it "S" or "C"?
     
  8. AztlanLC

    AztlanLC LawnSite Bronze Member
    Posts: 1,042

    Well the attorney would reccomend something to protect you for liability, but talk with a good cpa and he'll explain you what would be the best benefit for you moneywise, if well managed a C corp is a good choice too, it all depends on the size of your company, use a lawyer when you have decide what you want to become, I strongly reccomend to talk with a cpa about this.
     
  9. beck

    beck LawnSite Senior Member
    Posts: 432

    talking with a friend that is a CPA, she recommended the S corp before the C, because with the S corp the taxes pass through to the individual(k-1). Whereas the C corp there is double taxation both the company and the individual are taxed. She also pointed out at a certain point (income wise) it may be better to be a C-corp, but I don't remember all of those criteria.

    The LLC is a limited liability COMPANY which can be a sole proprietorship, partnership or any entity. All taxes get passed through to the individual, but still gives the owner liability protection.

    One advantage the corporations have is that it makes you an employee. And as an employee of the company you are viewed by creditors as having a job and not as self-employed. For some reason their is a stigma over us that are self-employed.

    Another side note for corporations is that it has a fiscal year which does not have to coincide with the calendar year. It is possible to set it up in the middle of the year, during the time when you are doing the work and producing income, not at the beginning of the year when their is little $ in the bank or a lot of $ going out for landscaping(mulch) or initial chem applications.
     
  10. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,033

    Beck - As an LLC I was also able to choose whether to have my fiscal year follow the calendar year or the middle of the year.
     

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