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DBA vs. Incorporated...

Discussion in 'Business Operations' started by fga, Jun 10, 2004.

  1. fga

    fga LawnSite Silver Member
    Messages: 2,449

    Doing mostly lawncare, what are the benfiets(if there are any) of going from DBA (sole proprietor) to incorpoarated. Every truck i see recently that used to say just "joey lawncare", now says "Joey lawncare Incorp."??
  2. eshreve1234

    eshreve1234 LawnSite Member
    Messages: 184

    These are the benefits as I see them.

    Some liability protection since your house and personal vehicle is not an asset of the corp., unlike a sch. c. But this still does not replace good insurance.

    If you elect S status, income still flows to your personal return. C corps must file and pay their own taxes. But income on C-corps are not subject to self employment taxes while S-corps are.

    Since you pay tax on your earnings each yr. with an S-corp distributions up to the amount of equity are tax free in future years. All distributions from C-corps are taxable (dividends 15% max, wages are at your personal tax rate).

    Easier to take on investors/partners with a corp. Just transfer ownership of some shares.

    If you are Incorporated you don't have to collect 1099's at the end of the year from your customers.
  3. txlawnking

    txlawnking LawnSite Bronze Member
    Messages: 1,905

    Might wanna investigate Lp or LLc as well as S or C corp. All of these are good entities to be. Read up, talk to several attorney's and CPA's before you make your desicion. And absolutely under no circumstances would I ever become a sole proprietor (DBA) or a general partnership, in these entities You WILL be taxed the heavyist and can be held PERSONALLY liable in the event of a suit or a partners poor business desicions. Read "Own your Own Corporation" by Garett Sutton esq. It has helped me a lot and I will be incorporating ASAP when I have the dough. Sorry this is long winded, But this is the most important desicion you'll make next to sales and marketing strategies.
  4. fga

    fga LawnSite Silver Member
    Messages: 2,449

    what status are you now, if you're not DBA? I've been DBA since my second year, before that I was "fly by night".
  5. JHE

    JHE LawnSite Member
    Messages: 102

    DBA = out of mind. I am an esq. and if you have any kind of assets then you are taking an enormous risk. One mower off of your trailer that takes out little joey on his bike and you can kiss your car, your business, your house and your dog good bye (won't be able to afford dog food anymore). Oh, and you will be living with your in-laws or your parents. Don't think it can't happen? My brother dumped a dozer off of a trailer on a 4 lane highway (nobody/ nothing got hurt except the rops were destroyed). My neighbor was cutting my lawn with his exmark (chute up) and threw one of those hard gorilla dog balls trough my window. From the grass stains on the ceiling and dent in drywall it looks like that damn thing would have killed someone if they were standing there. I am guessing you can hear a thousand more stories like this on this site. Get yourself into some artificial entity (S, LLC, etc) where you enjoy protection from liability and get the best tax pass trough advanatage at the same time (Inc. usually = double taxation. Once on the Corp.'s profits and once on your distribution. You want to only get taxed on your distribution.) I love Uncle Sam but he can kiss my butt when it comes to taking money. What is the best entity - consult an attorney. A little money spent on good advice now will save you a lot of money in the long run. And don't think attorneys are not like you lawn guys. Some are good and some are bad. Shop around, ask questions, get referrals, etc. Come to think about it, most states have a small business administration - you may be able to get some free advice, loans, etc. from them. Worth looking into!
  6. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

    Hi FGA,

    Here is an older post that might be helpful.

    DBA vs. LLC

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