When to become a business?

Discussion in 'Starting a Lawn Care Business' started by JeffH1, Jan 30, 2014.

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  1. JeffH1

    JeffH1 LawnSite Member
    Posts: 85

    I've been thinking about it for a while and I've been wondering what your guys' thoughts are.

    I've just started my "business" but am not a "business". I've started doing lawn care and only have a couple of residential accounts. I'm looking to grow in the next couple years and take this on full time in the next few years. It is just me servicing my accounts and will be until it becomes too much for just myself to do(probably 2-5 years down the road).

    My question is, when do you go ahead and take all the business steps necessary to start an actual, registered business such as obtaining an LLC, registering a business name, getting a tax ID #, registering for state and local taxes, or do I keep going with what I am doing?

    Also, is it legal to just run the business out of "your garage"? Their are so many legal things that I've been researching and reading about and they have my head spinning!

    :hammerhead:
     
  2. JDGlandscape

    JDGlandscape LawnSite Senior Member
    Posts: 511

    really? you do realize you are not techically supposed to take any money for services rendered without having a business first. techically by law, you have to start the business before you start the first lawn you ever mow for money....

    as far as the garage, you can run the business out of anywhere as long as you do not go against any town ordinances.
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  3. JDGlandscape

    JDGlandscape LawnSite Senior Member
    Posts: 511

    maybe youre getting confused between business and full time? just because you have a business does not mean it has to be full time
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  4. Armsden&Son

    Armsden&Son LawnSite Silver Member
    Posts: 2,358

    I agree...

    The answer to your question is yesterday....

    And come on, tell us how many accounts you really have.....

    HaHa... I am busting your chops...

    I'm not going to tell you what to do, you know what to do..... I got my DBA set up .... My insurance set up... My conduit for state tax set up, the whole 9 yards...... before I even touched one lawn...

    I am not the landscaping police and I will never play that game with people in my area.... But I will say this...

    I have taken business away from guys who are going the route that you are talking about just because many homeowners feel more comfortable going with an insured and licensed company. I believe you will get MORE business if you decide to "get legal."

    But again, you do you....
    and I'll do me....

    Live and let live
     
  5. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Posts: 7,710

    I think you are blowing this out of proportion.

    a decent amount of guys on here (25%-35% is my estimation) do not run "legal businesses" in one form or another.

    In this guys case he has like 2 lawns, and a friken time cutter mower.
    There isn't a single entity, municipality or authority that is going to waste their time to come down on this guy.

    In truth there is ZERO difference between what he is doing, and a sole proprietorship.

    In "most" cases, registering a business name in a municipality or state is $5-$50, they want you to have liability and workers comp.

    What happens if he doesn't have liability? they sue him, same thing that happens if he does have liability.
    What happens if he doesn't have workers comp? He gets hurt and goes to the hospital and has to pay for it.

    he doesn't have employees, the only law that he's technically breaking right now… is IF he didn't pay any taxes on his extra income from mowing lawns, which is so small at this point he could report it a 1040 EZ, with his day job W2.

    Im not a CPA but if you look put he laws, there is several things you can do of casual cash, from fixing cars to mowing lawns, to painting houses that, if they are under a certain percentage of your annual yield…. are literally just considered 'side jobs'…. look it up.

    So no.. he doesn't HAVE to be a business before he does his first lawn… it's just "bob" mowing the lawn.
    Technically, by law, if the person who hires him to mow the lawn, doesn't make sure HE has insurance, and HE gets hurt on THEIR lawn…law says their home owners insurance pays!
    My dad used to hire these types of people to help him around the farm (side job guys) to do things like re shingle the roof… he used to pull out temporary insurance policies for a month or two to cover the guy doing the work… just in case.
    He'd pay the people cash.

    It's up to them to pay taxes on it, because my dad wasn't their employer and since he isn't a business he wouldn't have to 1099 them… but if he claimed it as an expense on his taxes (paid Izzy 2 grand to shingle the roof) and then Izzy didn't report making 2 grand…some IRS dude "might" catch that, and come back to IZZY with takes and penalties.
     
  6. JeffH1

    JeffH1 LawnSite Member
    Posts: 85

    I know, I'm just saying someone who is only mowing a lawn or two isn't going to go out and register a business. I don't really know your personal history in lawn care and don't know if you have your own business...but if you do, are you saying before you ever mowed someone's lawn, you were registered as a business?
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  7. JeffH1

    JeffH1 LawnSite Member
    Posts: 85

    Thank you! I do plan on "getting legal" down the road. I just didn't see the point when I'm only mowing 3 lawns and have never tried to acquire any more accounts. In the next year or two, I do plan on acquiring more accounts and registering as a business I'm just not sure when, and ultimately, how, yet.
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  8. Armsden&Son

    Armsden&Son LawnSite Silver Member
    Posts: 2,358

    I was, yes.

    Because, I insist that everything I do in life is done right and by the book.

    I have a ton of respect for TPendagast and everything that he says is true....

    However,

    If you are performing a service for someone, you should ( see I said should, not have to) add in money for the state, then hold that money for the state, then give that money to the state at the end of the quarter.

    Why?

    Because that is how this country works..... Taxes are used for a number of things from repairing roads to educating my child.

    But again, I am a live and let live type of guy so I am not mad at you bud....

    I would like to ask however, where TPendegast thinks the line should be drawn.... A guy mowing 5 yards? 10 yards? What if he doesn't mow but just does mulch? 500 dollars worth of mulch? 5000$

    When does "Izzy" stop being the neighborhood farmer's roof repair guy and become "Izzy, the owner of Izzy's Roofing?"
     
  9. A. W. Landscapers  Inc.

    A. W. Landscapers Inc. LawnSite Bronze Member
    Posts: 1,287

    Absolutely.

    If you are providing a service and accepting payment (in any form) in return for your services, you need to first establish a business before you can legitimately charge people for your services.

    So yes, establish the business first then go out and sell your services to your first client.
     
  10. JDGlandscape

    JDGlandscape LawnSite Senior Member
    Posts: 511

    I read a lot of your posts and agree with a lot of them and have a lot of respect for you, but no, i was not blowing it out of proportion. yes it is illegal. although i would say 95% of businesses start that way, even i did. But i did not blow it out of proportion that it is illegal. no matter what you do, if you get compensated for it, it is "technically" supposed to be reported so you can pay the taxes on it. I agree that no he will probably not get caught, but it is much safer to start legally and do it the right way if he plans on expanding
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