Start-up Capital. Direct deposit from fulltime job's paycheck?

Discussion in 'Starting a Lawn Care Business' started by tyler_mott85, Dec 26, 2013.

  1. tyler_mott85

    tyler_mott85 LawnSite Senior Member
    Messages: 582

    What would the stipulations be if I were to open a business checking account and direct deposit a predetermined amount of money into it every time I get paid at my full-time job? How would this be accounted for in the P&L, taxes, etc. Not indefinitely...but perhaps one or two years? Until the new company is solvent without the cash infusion? And I'm talking like $400-$600 a month max.
  2. metro36

    metro36 LawnSite Silver Member
    Messages: 2,417

    This shouldn't be a problem. You would just need to record the deposits as capital contributed.

    If you haven't already, I would find a reputable accountant and have them help you set up your business. They will help you determine how to structure you business, obtain necessary tax id numbers, and set up accounts. It will cost you but its money well spent in the long run.
  3. larryinalabama

    larryinalabama LawnSite Fanatic
    Messages: 19,380

    Might be a good idea to keep the business account and books completely separate from your regular job and personal expenses. Hope you turn a profit soon!
  4. Turf Dreams

    Turf Dreams LawnSite Member
    Messages: 5

    I would have my check direct deposited into my personal checking account and then transfer funds into your business account and mark it as capital contributed as metro36 said. Your taxes will depend on your business structure.
  5. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    Never mix your personal money and your business money.

    Your business needs money you withdraw the cash or write a check. Remember come tax time the IRS will tax you as an individual any way. Even if you are a LLC.

    You do not need an accountant to start up. You get a EIN number from the feds. Required for everyone. Solo then you can get a workmans comp exemption and not have to pay for WC insurance.

    Then depending where you live you will have to register your business. For me that was with my county. Sales tax if required then you get a sales tax number. You will need a EIN number for that.

    You do need to write down every cost. Even a pencil. Every hour worked. Every income. Costs must be known to do income taxes.

    Then you will be able to see if your pricing provides enough profit. Then you will be able to do more accurate estimates and stop doing guesstimates and losing money on some jobs.
  6. tyler_mott85

    tyler_mott85 LawnSite Senior Member
    Messages: 582

    Thanks for the responses. I was thinking today at my day-job that the capital contributed would not be a taxed item anyway since it's just "cash on hand", right? It's only the return on the investment from that capital that gets taxed.

    Good idea to just transfer money from personal account to business. Can still set up an automatic monthly transfer to have the same affect.
  7. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    Keep business and personal money separate. Do not have automatic transfers.

    Running a landscape business does not need constant large cash in flows. Mowing requires gas. And your time which you do not have to be paid for.

    Hedge trimming. Same gas, your labor does not require payment.

    You avoid buying mowers on credit you eliminate large cash flows leaving the business.

    If you can avoid taking a salary being you are working part time you can build up the businesses cash on hand. Your full time keeps your family running. Your business money coming in builds the capital to invest and cover costs.

    To willing to automatically transfer money makes it to easy to spend money instead of keeping spending low.

    Mower and edger blades do not get replaced that often and are not that expensive. Line for trimmers is not that expensive.
  8. cpllawncare

    cpllawncare LawnSite Silver Member
    Messages: 2,659

    Hmm? there is advertising cost, insurance cost for the business and vehicles, maint cost for the equipt and vehicles, you'll need to allocate a portion of every job to a maint account, then there is the phone and internet, you will have a website won't you? the list grows very fast! don't be fooled by those that say " I don't have any overhead" the day you start your business YOU HAVE OVERHEAD! Oh yea there's licenses that must be paid for. You'll want to have some T-shirts to work in and some golf shirts for giving estimates in there's uniform money.Not trying to scare you but you really have to be realistic about your TRUE cost.
  9. shane-pa

    shane-pa LawnSite Senior Member
    Messages: 338

    my business required a large up-front sum of money. I had most of the equipment I needed to mow a few lawns and shovel some mulch. but I needed the "extra overhead". if you have that up-front money, do not put monthly deposits into the business from your personal paycheck. instead put that money into a separate personal savings account and use it as needed. you may find that you will not need that money for overhead but will for a large purchase down the road. hopefully you will be successful enough to not need it. the personal money put into the business will be recorded as owners deposit (what I call it) then dispersed where appropriate.
  10. tyler_mott85

    tyler_mott85 LawnSite Senior Member
    Messages: 582

    I do not have personal savings that I'm going to use to start-up. I have all the basic equipment I need to start-up as I have done lawn care before. I was just not legit. The $400-$600 a month is less than half of what I save into my personal savings at this time. This monthly capital contribution is what I will use to start-up my business and keep it running. Nothing else. It will cover all of my expenses every month including insurance, advertising, t-shirts, fuel, trimmer line, etc. I am starting with ZERO accounts. ZERO sales. But I am putting this 400-600/month into the company. My plan is to keep this $400-$600 a month going into the business until at a very minimum I am clearing the 400-600 after expenses but before taxes. Then I will look at my personal and business finances and decide if I will continue to put that money into the business as additional marketing capital or use it to quickly save up to pay cash for a bigger mower/trailer/truck. Or perhaps I'll put it back into personal savings.

    I will not be taking salary from new biz until I'm done putting money into business, obviously. I will not be purchasing anything on credit. The more money you put into a business the faster you can get money out of a business if you're smart about it. I'd rather start-up THIS year with the only capital I have as being the $400-600 a month. Than save up the SAME amount of money every month and start next year with only a relatively small lump sum.

    I already have logo, truck, basic equipment, business cards, customer database and most of my blank forms/agreements/letters set. All I need after checking account is insurance, advertising and billing software to get my going this year. All of that can be paid for the "year" with one month each of my capital contributions. Or I can split the insurance and advertising out.

    I know the lawn biz well. I just don't have experience on the actual business, accounting side of the operations.

    I hope this helps clarify my plans.

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