Discussion in 'Starting a Lawn Care Business' started by GravelyWalker, Oct 10, 2012.

  1. nealster

    nealster LawnSite Member
    Messages: 20

    He is right. Cash flow is everything, it keeps you going month to month, it pays your bills, it keeps money moving in your bank accounts. Don't throw a large sum of money out at one item, it ill drain your account and make you vunerable in the long run. You need to figure out if you can afford a monthly payment of $125 - $150 a month right now or what would it take for you to afford that payment. Usually it means picking up a couple more clients.

    But whatever you do don't buy a bigger or better mower unless you absolutely need it. If you don't have the income to support the payment then you don't need it.
  2. larryinalabama

    larryinalabama LawnSite Fanatic
    Messages: 19,650

    NOT Mine, Debt kills off more start up business than all other factors combined!
  3. CL&T

    CL&T LawnSite Senior Member
    Messages: 493

    Probably true but you need to consider that debt isn't just about financing or loans. It's also about insufficient cash flow, insufficient startup capital and, what I've found to be the biggest killer- not paying taxes and the IRS and state padlocking the business.

    That brings us back to the 1099 discussion. A business I know of had a girl in the office to answer the phones, etc. She had been with the company for a number of years and they always gave her a 1099. Come April she always paid her tax on the amount, maybe she did quarterly estimated payments. Point being she did everything right and had no idea she should have had witholding taken out and been a W2. So, one day the owner lets her go and she goes to the unemployment office. Anybody want to guess why this company is out of business? They also were giving 1099s to all their other employees.
  4. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Messages: 2,131

    Heres another example for you guys of companies being scewed when they 1099 an employee. A guy I know was working for a landscaper, he was paid $25. He started in February and worked until March the faloowing years. Over the course of the 13 months he was paid about just over 75k after overtime. When he went to pay his taxes in March he claimed that he was not a sub, and denied ever receiving a 1099 form and insisted that when hired he filled out a w-2. The company had been 1099 their employees for years and never had a problem.

    What happened this time was that this employee recieved his 1099 in Janaury and it finally sunk in just how much money he was going to have to pay to the feds and state. So he decided to play nieve, and take advantage of the company until he had to pay his taxes. He volenteer for as much overtime as he could get over the winter plowing, staying late maintaining equipment and cleaning. Then once the snow was done for the year he went to a tax preparer and played stupid. They fallowed procedures stating that the company was refusing to issue a w2 to an employee and contacted a gov agency (I don't know if it was IRS, Dept of Rev, Dept of Labor), they investigated and found that he was indeed an employee. The big thing that sealed the deal was that the guy was paid an hourly rate with 1.5 overtime.

    Because the guy claimed he filled out a W2 and thought taxas were being taken out, the gov took his word on it and the comapny had to pay the back taxes for not just that emplyee, but all the employees. It didn't put the company out of business, but it cost the owner a lot of money between back taxes and all the fines he got.
  5. CL&T

    CL&T LawnSite Senior Member
    Messages: 493

    For you guys that say your accountant is OK with 1099s. My experience is that accountants listen to what you tell them and figure you know what you are doing as far as your employees go. So if you tell them the people that work for you get 1099s they are going to figure that you know what an independent contractor is. They are not going to question you on it unless you bring it up.
  6. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    If I ran a construction company then true subcontractors are the way to go.

    Service company with a route and equipment then W2 employees.
  7. nepatsfan

    nepatsfan LawnSite Gold Member
    Messages: 3,142

    As long as they aren't using your tools, trucks, or being directed how and when to do things then they could very well be legit. I highly doubt that is the case.

    To the guy that just uses his son.....doesn't matter, law still aplies
  8. PerfectEarth

    PerfectEarth LawnSite Bronze Member
    Messages: 1,734

    Another wise post. Thank you.
  9. Greg78

    Greg78 LawnSite Silver Member
    Messages: 2,010

    That's nice short and sweet. Should be easy for anybody to understand.
  10. justanotherlawnguy

    justanotherlawnguy LawnSite Bronze Member
    Messages: 1,282

    jeez people are so ignorant!!!!

    just because you go into debt does not mean you will fail. if you financed a brand new z for 48 months at 0% and that z in turn caused your productivity to sky rocket and generate the majority of your income, how could that lead to failure.

    ALL successful businesses run with some level of debt. let me say that again ALL successful businesses run with some level of debt.

    its the white trash ignorant guys on here with zero business sense that avoid credit and have no idea how to responsibly use credit........

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