Incorporating my company.

Discussion in 'Business Operations' started by 205mx, Jan 22, 2013.

  1. 205mx

    205mx LawnSite Silver Member
    Messages: 2,393


    I have around 40 lawns.

    My current name is " MTL Lawn Care Services"

    I often get asked to repeat the MTL part, or what it stands for.

    I was thinking of changing the name when I incorporate. my clients know me well so the name change would not be a big deal for my existing clientele.

    In the future I want to branch in to managing properties for HOA's, business parks, and rental properties, with a focus being on the lawns.

    I was thinking of something like "L.A.P.S. INC" .... Lawn And Property Services, Incorporated.

    what do you guys think.

    also, we are going with an S-Corp.

    the thing i didnt like about MTL was that it didnt really mean anything, and is sort of forgetful.

    4th year in business. Thanks.
  2. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Messages: 3,465

  3. 205mx

    205mx LawnSite Silver Member
    Messages: 2,393

    so, "Lawn and property services, incorporated" ?

    Thanks again
  4. JFGLN

    JFGLN LawnSite Bronze Member
    Messages: 1,071

    Yikes! You can do better.
  5. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    If you don't mind me asking, why are you considering incorporating with only 40 lawns? I'm guessing you're just solo at this point? You are creating a larger financial compliance burden without creating much of a tax savings opportunity. Maybe you should wait a few years until your business grows a little larger...
  6. 205mx

    205mx LawnSite Silver Member
    Messages: 2,393

    I've had a few people tell me it's better to grow In to your boots than the walk barefoot to the shoe store

    My accountant is going to speak with me today about LLC instead. And then filing as a sp or scorp.

    40 account really doesn't have much to with it. It's more about revenue.

    Ones 40 accounts may be 20k profit.
    To another it may be 50k.

    And no, I have a part time employee. That's why I atleast need to LLC this year- do you think that is wise? I will likely have to make him f/t if I grow much this year.

    Thanks for the advice
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  7. britsteroni

    britsteroni LawnSite Senior Member
    Messages: 334

    I mean no offense, but I have no idea what you meant by "it's better to grow in to your boots than the walk barefoot to the shoe store."

    An LLC taxed as a S-corp still has the same filing requirements as an S-corp. The LLC means nothing to the IRS. They can either be taxed as sole-props, s-corps, or partnerships.

    I agree 40 accounts has nothing to do with it. I apologize for making assumptions.

    I still stand by my original post of questioning the value of incorporating with one part time employee.

    I don't know your accountant and am making no judgments about his advice, but at least hear me out. First of all, the accountant has something to gain by pushing into S-Corp status. Instead of just filing your 1040, he now will file your 1120S and 1040 plus the additional payroll filing requirements as I'm assuming you don't want to handle those yourself.

    So for the extra headache, you are going to be paying additional accounting fees of around $1,000 (for 1120S prep, for meeting with the accountant, and for the additional payroll filing requirements).

    So for you to JUST BREAK EVEN, you would need to save at least $1,000 in payroll taxes. If you show a $20,000 profit, you would need to pay yourself just $13,465.00 and take $6,535.00 as a distribution.

    This would be the math:

    Sole-Proprietor - $20,000 proft x 15.3% in self-employment taxes = $3,060 in payroll taxes.

    S-corp = $13,465 in salary x 15.3% (you pay half, the S-Corp pays half) = $2,060 in payroll taxes plus additional accounting fees of $1,000 = $3,060 in taxes plus compliance.

    Now, that also assumes $13,465 is a reasonable salary for someone who owns a business and works full-time in the business with only one part time employee. I doubt you could find very committed workers for $13,465/year even in this seasonal business.

    Again, just trying to be helpful and let you know what you're deciding on.
  8. JFGLN

    JFGLN LawnSite Bronze Member
    Messages: 1,071

    Good points here. What's a reasonable salary? Maybe $35k. You save money on dividends taxed at a lower rate.
  9. 205mx

    205mx LawnSite Silver Member
    Messages: 2,393

    This is good advice. I will mull it over with my accountant (my brother) tonight. He doesn't charge me. We do a little Skype session online.

    Just to make the choices. The right choice may be to put my company in LLC. Then when I file taxes, file as a SP.

    Then in a few year maybe, incorporate
    Posted via Mobile Device
  10. branchoutshrub

    branchoutshrub LawnSite Member
    Messages: 118

    Great advice by britsteroni!

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