to corporate or not to corporate

Discussion in 'Lawn Mowing' started by Bluegrass Lawn Service, Nov 28, 2000.

  1. Bluegrass Lawn Service

    Bluegrass Lawn Service LawnSite Member
    Posts: 98

    I have been thinking about incorporateing (sub chapter s ) or known as s-corp. Verses sole proprietorship. I need help in deciding can anyone help, that's been through it.

    Also some of you guys have talked about a partner, how did you come about this. Been thinking about making one of my employees a partner but don't know how to go about it.

    If you have employees and they're only seasonal, do you lay them off and let them draw unemployment or what?

    I'm not trying to get into personal business, however if you have ideas I would like to hear them. You can e-mail me direct. bluegrass@seidata.com Thanks
     
  2. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    Since everyone runs thier business a different way, it would be hard to say. Talk to a CPA. Thats what I did. He told me that I don't need to be incorporated at this time.
     
  3. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    I posted the same question several weeks ago mostly what I receved were negitive responses, but when you can eliminate some of the self employment taxes by reducing your wages and taking dividends that are not considered self employment it will soon pay for itself.
    Also if you own the equipment and lease it to the corperation there are no self employment taxes on that either.
    One person called it "funny math" well if the irs will let you do it legaly I say GO!
    It also protects you liability wise, if you hurt someone accidentaly and they sue more then you have insurence for, give them the paperwork and your out of it. Go reincorperate under a different name and your back in.
    The last post was right get you a GOOD CPA he can tell you all the pros and cons not just what we smart people here at lawnsite know. We know how to cut grass he knows how to cut taxes, for every 1% of taxes he cuts is a 1% rase for us. The time might not be right for you to incorperate but it may also.
    Jim
     
  4. Bluegrass Lawn Service

    Bluegrass Lawn Service LawnSite Member
    Posts: 98

    Thanks Jim I don't know what the others do along the IRS lines but I don't want to pay anymore than I have to. It cost some money to get started but maybe it's worth it in the end. I do have an accountant working. Thanks for your imput.
     
  5. Skookum

    Skookum LawnSite Senior Member
    Posts: 675

    My family owns lumberyards that are multi-million dollar operations that are setup as sub chapter s. It works well for them!

    All I can say about personally owning assets and leasing them back to your company, like equipment and buildings, is that it DOES protect your assets from the company liability, but you then have created another income on your personal tax side. It will require additional tax payments on your personal end.

    Alot would depend on the size of your company and the amount of "funny math" you are doing, but be sure you can keep up with what is going on when the paperwork begins to pile up to the point that the CPA seems to be the only one that understands it all and they are telling you how much you are saving. In otherwords, be sure your saving that much!
     
  6. Skookum

    Skookum LawnSite Senior Member
    Posts: 675

    Oh yeah, I would never take a partner unless it was the only way to save or start the company. I think most regret taking a partner later down the road.

    It's like rooming with your best friend in college, most usually end up hating each other in some form or another.
     
  7. Hello Everybody:

    I do not know if I can help much so all I can do is tell you from real life experiences.

    I talked to several bookeepers about it & unless you are making a good bit over $100K a year (personal salary) it wouldn't do you much good.

    Basically same thing from a Lawyer friend of mine.

    Here in JawJa back in the mid 80's there was myths going around about being incorperated. Like I say it varies State to State.

    Folks would get incorperated so if they got sued they could only go after the company & not sue ya personally. That's BS, First after they bankrupt your LOL, Mickey Mouse Corperation if they didn't get enough from that then they turnaround & sue you personally till they get what they want. If you worried about getting sued best thing to do is get plenty of Liability Insurance.

    At my business I have $500K & then a Million umbrella. You only pay through the nose for the first $100K of Liability. The rest is not much at all.

    At home I carry $500K liability & on my 4 vehicals. Before I had a $100K only. Well I've had the crap sued out of me twice. Believe it or not the difference between $100K & $500K was a extra $67.50 every 6 months. It's worth a $1,000 a year for that kind of piece of mind.

    Once a employee of mine (5 or 6 years ago) was in a wreck, no damage & both parties were at fault, no body got a ticket. Week later they found out I owned a old business. And guess what the lady was at work & that's right a week later, she stood up at her desk & screamed out, fell completely backwards, busting her head open. They say she was in trama from the wreck a week ago? They sued & got $25,000 out of court. It was their 5th lawsuit in 2 years. Insurance companies will now settle out of court for a little $25K any day of the week.

    1 1/2 years ago my daughter was pulling across a 4 lane at a curve going to the left (in a little 2 door Acura Integra), well this 96 Lincoln Towncar was traveling so fast he hit her (He also switched to left hand lane) & slid a 170 feet on pavement & another 60 feet off road totaling his car. Yep the speed limit was 45mph. LOL, I wonder how fast he was traveling. My daughters car got her headlight busted out only, about $300 in damage. I fixed it for $130.

    He got out of car & was not hurt. Walked up to top of ditch & had a major heat attach. Yep in the hospital over 30 days, had to have a pacemaker installed, spent 5 days a week for over 10 months getting Physical Theropy. What gets me is, he was 72 years old, Diabetic, had already had 2 massive Heart attachs & was a disabled vet to top it off. He should not even have a drivers license at all. It might have been her fault, but if he was driving the speed limit, it wouldn't have happned. I had pictures of skid marks, not admisable in court. No record of it on accident report & The Judge told me he didn't care if he was going 200mph she was still in the way. We didn't plead guilty, it was held over another week & new juge came up when it was our turn & he talked to me like I was a DOG & he plead us guilty, we had no choice in the matter?

    When he (Judge & man in wteck both) meets his maker he will then go & meet all the other Judges, Lawyers, Doctors, CPA's, Polititions & all those other blood suckers that have did nothing butt put the working man in early graves broke & wore out before their time.

    He had been a customer at my business for over 20 years & well off. His liar witness was also a customer of ours. Well the insurance company paid this walking medical science miracle $42,000. I was very lucky, I had plenty of insurance. I was told later that they sued me because I owned a business, had plenty of insurance & plenty of money? LOL

    Thank God I had plenty of Insurance & owned a business only.

    If you get Incorperated, it will make you a target for lawsuits & the IRS. I'm a sole propriator & will remain one. If I ever make big bucks, I still be the same.

    I also see here where I live, that there is a lot of guys that have $600 or so a week income, drive a $30K+ pickup, talk on the cell phone arguing with their wife about money 50 to 100 hours a month, go on sea cruises twice a year & still owe me over $1,000 bucks for months of repairs & Equipment. They Incorperated too! LOL, maybe that's a requirement now a days?

    I remain a Sole Propriortor, I try not to be a target for anyone, Butt I'm not doing a very good job of it am I? I don't need Corp. at the end of my name. I'm happy just the way I am! That's a Fact Jack!
     
  8. Dan Stoms

    Dan Stoms LawnSite Member
    Posts: 16

    In Ga we have what is called an LLC,limited liability corporation. I've been told that it gives you less personal liability, but as far as taxes go you still fill out the forms just as you have before.This will be the first year for me. So I'll get to see for myself. Maybe this is something you could look into.
     
  9. KirbysLawn

    KirbysLawn Millenium Member
    Posts: 3,486

    I sent my new company up as a sub-s corp, did it on-line at http://www.mycorporation.com, was very simple and they have a lot of information there. The total was $365.00 for everything.
     
  10. GroundKprs

    GroundKprs LawnSite Bronze Member
    Posts: 1,969

    It is commonplace for an attorney to recommend incorporation to limit liability, and for an accountant to resist it because of the increased paperwrk load. If you keep a good accountant (a GOOD accountant knows more about your finances than your wife, and often yourself!), you incorporate (or disincorporate) when he advises.

    In a partnership, each partner owns business completely. So if we are partners, and I make a bad decision for the business, you share in my error, even if it costs $50,000.
     

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