What's your best adivce for starting...

Discussion in 'Starting a Lawn Care Business' started by rutwad, Aug 8, 2006.

  1. rutwad

    rutwad LawnSite Member
    from Alabama
    Posts: 179

    I am mentally ready for the plunge of starting a new business, but I NEED HELP!

    I plan to buy a truck, trailer, and equipment. I plan on starting a LLC. I have researched and found most everything I want, but what's first.

    Do I try to register the company name first, then buy my business liscence under that name?

    Is it after that when I do the paperwork for LLC?

    Then comes business accounts (checking, credit card, etc.)

    Now is it time to purchase the goodies using the business accounts that I have partially funded and borrowing from lendors also?

    Insurance.... commercial vs. industrial?

    Can someone point me in the right direction? Please hurry before my wife has time to change her mind and tell me it's NOT OK!!!

    thanks in advance
     
  2. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155


    Start out by mowing on the weekends and keeping your job. If you like it then increase your customers and go from there. Plunging into a business is like diving into an unfamiliar pool blindfolded. If you have to borrow money to buy basic commercial equipment they you really don't have enough money to start it full time, unless your wife has a good job. Figure at least 1 year of living expenses above and beyond start up costs, 2-3 would be better.

    It's not the problems that you anticipate, it's the problems that you didn't anticipate that ruins businesses.

    When you develop your business plan (1st step) factor in a way out of the business. It's not hard to get in advertising contracts, employee wage expenses, leases, etc etc and get in a position where you really can't close down the business.
     
  3. rutwad

    rutwad LawnSite Member
    from Alabama
    Posts: 179

    Yep, looking into this as a part time venture while I do keep my current job. I could pay cash for it all, but I do not really want to.

    Also, as a LLC I read that you only have to pay income tax on the salary that you pay yourself from the business. Since my wife and I are both keeping our regular full time jobs, can I place all the income generated by the business back into the business account and not pay ourselves anything. Probably sounds crazy wanting to work and not get paid, huh? But the money would be there for when we didi need to pay ourselves, or it could be used to grow the business. Will that work?
     
  4. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I own an llc so before you get excited, the tax burden is lighter but light it is not. To answer the first question: You first register the LLC under your business name, so 'business name LLC,' then you go to your County's local business registration office and register that under the name of 'your new llc name' (which basically same thing) which effectively makes your LLC pwn your small business.

    Tax-wise, you pay income tax on salary yes but also social security (don't forget the business matches ss dollar for dollar so another 7.5% or double what you'd normally pay), futa (federal unemployment tax), and you pay taxes on your annual profit (that's gross - ALL expenses (incl.labor) = what's left over = your profit). On that note, you need to show some kind of profit in your first 5 years, while 100 dollars is considered a profit.

    Hope that helps.
     
  5. rutwad

    rutwad LawnSite Member
    from Alabama
    Posts: 179

    Thanks. Would a LLC be the way to go?

    From what I read earlier about a LLC, I thought I would only have to pay taxes on my salary, not the business profit. This was one of the advantages of a LLC over sole proprietorship. Therefore, if I have a business profit of $5000, yet I only pay myself $300, then that would leave the $4700 to the business and I would only pay income tax on the $300. .Is this not correct?

    And finally, since I have already found some things I would like to purchase, is there a way to get them now before I have my business accounts set up, either with cash or by financing?

    Thanks again, I feel so helpless.
     
  6. Poncho25

    Poncho25 LawnSite Senior Member
    Posts: 369

    I personally went with an S corp instead of a LLC, reason being is that I do plan to grow and this is a great was my option. Also being married I wanted my wife as part owner of the company hence anything should happen to me, she will take full ownership with out any paperwork or headaches for her. The best advice would be to talk to your accountant or attorney and find out which is the best way for you to go in your state.

    As an LLC you typicall have pass-through taxation, where earnins are treated like those in partnerships and coprporations, members are typically not held personally responsible for the debts and liabilitys of the company, there are no restriction on the number of owners allowed, some downsides of an LLC is that Corporations are more expensive to form due to fees imposed by each state, and ownership is typically harder to transfer then with a corp.

    for more info check out the site for the IRS, alot of good info there in means of small business information. www.irs.gov
     
  7. Poncho25

    Poncho25 LawnSite Senior Member
    Posts: 369


    yes you can, you would just have to sell the equipment to the company once you have a business account set up, either CC or bank.
     
  8. rutwad

    rutwad LawnSite Member
    from Alabama
    Posts: 179

    Thanks for the link www.irs.gov. I searched around and now I have another question. One sight I was led to compared most types of business structures (excluding LLCs) and it looked as though a Sole Proprietorship may be the best way to go. It would be the cheapest and easiest to operate, but I understand the owner has unlimited liability. With this type of business, assuming I can afford everything I purchase, there does not seem like there would be much risk. Of course I will have liability insurance to cover any potential damage done to property.

    So now I ask is it worth the risk. I understand unlimited personal liability for the company, unlimited company liability for personal, but it mentioned no double taxation that is associated with corps. Cheaper to start and operate. It sounds pretty good.

    What's your advice?
     
  9. Killswitch

    Killswitch LawnSite Senior Member
    Posts: 438

    Move back home with your parents and go back to school.

    Thats my advice.

    lol
     
  10. BFLL

    BFLL LawnSite Member
    Posts: 42

    My advice would be take it one a step at a time, Don't let your ass out run your feet. First off you need customers, Because you want to start a lawn business doesn't mean your going to get customers over night, If you spend all your money getting (Titles) you want have any left to put in the business. You don't need to go out and join all these clubs to be legit.

    Get a name.
    Get Insurance
    Get customers.
    Pay taxes.

    Screw the rest until you start making money.
     

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