Discussion in 'Business Operations' started by xtremelawn, Feb 2, 2008.

  1. xtremelawn

    xtremelawn LawnSite Member
    from USA
    Posts: 109

    Would it be a good business decision to become a LLC? What are the benefits of being a LLC? Are there any disadvantages? What does it Cost?
    Has anyone ever used Legal Zoom to do this?

    Thanks :confused:
  2. Armadillolawncare

    Armadillolawncare LawnSite Senior Member
    Posts: 570

    I assume you are operating as a sole proprieter now. The difference is if you cause damage now and are sued they can go after any personal assets you may have such as your house, cars, savings etc. When you become an LLC it seperates your personal assets from business assets. When sued as an LLC they can go after business assets but your personal assets are protected. According to my accountant that is the biggest reason people form LLCs, to protect personel assets. I am not an accountant or attorney so you should check with one of them to verify that my info is correct.
  3. Armadillolawncare

    Armadillolawncare LawnSite Senior Member
    Posts: 570

    As far as cost goes the state of Texas charges 300.00 to form an LLC. If you use Legal Zoom like I am considering then you will pay the 300 for the state and then another 129.00 which is the fee legal zoom charges. Someone on here claimed that Legalzoom was a scam because of the 129 charge but I think he wasn't thinking. It is no different then us mowing a lawn, sure someone can do it themselves if they have the equipment, time, knowledge and desire but if you don't then you pay someone to do it. I don't feel I am scamming someone when they pay me to mow their yards so why is Legalzoom scamming someone to perform a service they don't have the time knowledge or desire to do themselves. By the way I think you can get a discount on Legalzoom if you type in the word "XMradio" when you check out. I have not done it yet so I don't know exactly where or when you type it in but keep your eyes peeled for an area to type in a discount code.
  4. Bryn

    Bryn LawnSite Member
    Posts: 206

    LLC's are not perfect, and the following should be kept in mind

    An LLC owner can be held personally liable if he or she:

    personally and directly injures someone:
    personally guarantees a bank loan or a business debt on which the LLC defaults:
    fails to deposit taxes withheld from employees' wages:
    intentionally does something fraudulent, illegal, or reckless that causes harm to the company or to someone else:
    or treats the LLC as an extension of his or her personal affairs, rather than as a separate legal entity.

    If you are a sole member of a LLC and blind someone with a mower, not only is your LLC liable, so are you. It seems LLC's have more protection for companies with two or more workers when liability is concerned.

    I strongly suggest you speak with both your accountant and lawyer. Try the accountant first.
  5. john3253

    john3253 LawnSite Member
    Posts: 20

    Bryn I think your right. Many people are incorporating because of this and you can file taxes as an s corp. which is pretty much the same as an LLC. I think when you are inc. you are completely separated from the company no matter what. Even though you are still the owner you are just an employee. Might be something to check into with an accountant or lawyer. Good luck.
  6. LB1234

    LB1234 LawnSite Gold Member
    Posts: 3,210

    when I converted the company over to an LLC the biggest thing my attorney stressed to me was seperating business and personal. He said in every corespondance I provide in writing that underneath my signature should be the name of the company. In other words, indicate to the recipient that I am acting on behalf of the company and within the interests of the company.

    He says he has seen cases in court when an LLC is sued the plaintiff will attempt to go after their personal assets as well. If it can be proven that you haven't acted on behalf of the company or where personally responsible than can still go after your personal assets.

    My advice if you are married with a trusting wife have everything in her name and don't have ANY personal assets...then what are they going to take?

    IMHO, sometimes people see you have $$$ and they try and get it the easy way.
  7. the ace

    the ace LawnSite Member
    from usa
    Posts: 147

    If you Inc. are your taxes kept completely seperate from the corporation? Also, if the IRS found a mistake with the company books could they collect and or freeze your personal account or personal assets?
  8. bj1bmx

    bj1bmx LawnSite Member
    from NJ
    Posts: 76

    you can ALWAYS be sued directly for your actions. it doesnt matter if you have formed an LLC or corporation. This is why doctors have malpractice insurance and why you should have adequate insurance for your business and possibly an umbrella policy if your assets are large enough.

    an LLC is meant to protect assets held outside of the entity in the event of a lawsuit. however, most people on this website operate as solo operators and are therefore doing all the work themselves. an LLC offers them zero protection. for the owner that has his employees mowing, there is more protection offered.

    if you are a passive owner in a business or hire a manager/employees to do everything and have a large amount of assets, you can benefit greatly from multiple LLC's to own each business/property you own

    first and foremost is to have several million worth of insurance coverage. operate responsibly. keep other large assets in different entities, spouses name, etc.

    its a shame how this country has become sue happy. you are never fully protected, just use common sense and cover your butt the best you can
  9. columbia

    columbia LawnSite Member
    Posts: 76

    only problem with being a corporation is you get charged for taxes twice...once for corporation earnings and once for your personal take...

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