So how is everybody else in business

Discussion in 'Business Operations' started by Hodge, Sep 26, 2002.

  1. Hodge

    Hodge LawnSite Senior Member
    Posts: 261

    This is a general question about how everybody else has their business registered:

    Sole Proprietorship
    A sole proprietorship exists when a single individual operates a business and owns all assets. A sole proprietor is personally liable for all debts, and business ownership is nontransferable. Under a sole proprietorship, the life of the business is limited to the life of the individual proprietor. The sole proprietorship makes no legal distinction between personal and business debts, and it does not require a separate income tax return. A sole proprietorship is often operated under the name of the owner. Whenever operating a business under a name other than the sole proprietor, an Assumed Name Certificate must be filed with the county clerk. Assumed Name Certificates are discussed later in this section.

    General Partnership
    A general partnership exists when two or more individuals or businesses join to operate a business. Under a general partnership, a separate business entity exists, but creditors can still look to the partners’ personal assets for satisfaction of debts. General partners share equally in assets and liabilities. A general partnership requires an annual partnership income tax return (separate from the partners’ personal returns). A general partnership may be operated under the names of the owners, or a different name. In either case, an Assumed Name Certificate must be filed with the county clerk.

    Limited Partnership
    A limited partnership is a partnership formed by two or more persons or entities, under the laws of Texas, and having one or more general partners and one or more limited partners. General partners share equally in debts and assets, while limited partners have limited debt obligations. A limited partnership must be registered with the Secretary of State. (See next section for details on the business name.)

    Registered Limited Liability Partnership
    A registered limited liability partnership is a general partnership that has been registered with the Secretary of State. A partner’s liability in a registered limited liability partnership differs from that of an ordinary partnership. In a registered limited liability partnership, a partner is not individually liable, under some circumstances, for debts and obligations of the partnership arising from errors, omissions, negligence, incompetence, or malfeasance committed in the course of business by others in the partnership.

    Corporation
    A corporation (Subchapter C or S) is created when two or more individuals, partnerships, or other entities join together to form a separate entity for the purpose of operating a business in the state. A corporation has its own legal identity, separate from its owners. The corporation offers protection to the business owners’ personal assets from debts and liabilities relating to the operation of the corporation. Taxation of the corporation varies depending on the type of corporation formed. A corporation must be registered with the Secretary of State.

    A Subchapter C Corporation is taxed at a higher rate than an individual. The owners are not taxed personally for profits; however, the owners do pay personal taxes on any salaries and/or dividends, and the corporation is also taxed on the profits.

    Owners of Subchapter S Corporations may deduct business losses on personal income tax returns, similar to a partnership. The Subchapter S Corporation also offers alternative methods for distributing the business income to the owners.

    Limited Liability Company
    A limited liability company is an unincorporated business entity which shares some of the aspects of Subchapter S Corporations and limited partnerships, and yet has more flexibility than more traditional business entities. The limited liability company is designed to provide its owners with limited liability and pass-through tax advantages without the restrictions imposed on Subchapter S Corporations and limited partnerships. A limited liability company must be registered with the Secretary of State


    This is a post from the handbook from TX....
     
  2. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Sole Proprietorship
     
  3. Precision Care

    Precision Care LawnSite Member
    from Indiana
    Posts: 28

    LLC is the best way to go. You can still file taxes as a S corp. when you file the proper paper work. It is inexpensive to do 400 to 700 when you use an attorney. But to do it yourself is around 100 dollars. If you operate as a sole prop. than open yourself to all personal responsabilty. For example You do something and get a law suit than they can come after your personal assets {house, car, savings} and anything that has your ssn such as your kids savings, no joke. LLC is by far the easiest to be in.
     
  4. Nomoslowmow

    Nomoslowmow LawnSite Member
    Posts: 39

    We are a C corporation. There are a lot of tax and liabilility factors to consider when making this decision. There are also tax ramifications to think about if you think you might ever sell your business (at a profit, hopefully!)

    One of the things we were asked to consider is how you will run your accounting of business vs. personal money.

    This is a case where your CPA and your lawyer are both needed.

    Most of the people I talk to are sole proprietors. I prefered a little more distance between my personal finances and those of the business.

    HTH!

    Bob
     
  5. Hodge

    Hodge LawnSite Senior Member
    Posts: 261

    How many owners do you have and why did you choose the Corporation Subchapter C. Would this protect you from the suer going after personnel property?
     
  6. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,033

    LLC with the wife. No employess, not even the wife and I. That way you don't pay unemployment comp. or workmen's comp. and OSHA has no jurusdiction. Better protection than a sole proprietorship, which is what I was going to do at first.
     
  7. NBLL

    NBLL LawnSite Member
    Posts: 77

    Sole Proprietor...This is my first full year in business, set up the DBA account, insurance, pesticides license, business license, I thinks thats everything. Might consider going a different route next year but keeping it simple for now.:cool:
     
  8. Art Stubbs handy 58

    Art Stubbs handy 58 LawnSite Member
    Posts: 132

    LLC Here

    Benifits for taxes, Ins, and no way they can take my House, wife, cars, toys...


    Well, maybe my wife LOL.... :D
    good to go this way all around if you are a small operation..
     
  9. Hodge

    Hodge LawnSite Senior Member
    Posts: 261

    so LLC will provide protection from them going after you house, car, personnel bank accounts? How complicated is the IRS filing do you just roll the business into your personnel earnings or are they kept seperate.

    or

    you would file jointly with me and the wife and then seperate for the business?:confused:
     
  10. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,835

    I have a good friend who just graduated from a respectable law school, passed the bar, and is now an attorney. He is one of the most intellectually gifted people I know. Straight A's his whole life. Graduated Magna Cum Laude, etc..... This was his specialty. So we were chatting on email recently and below is the text of one of his replies to me. Forgive the loose language - this was a chat among friends.

    Take it FWIW.
     

Share This Page