Starting out Again, LLC or Solo proprietorship?

Discussion in 'Starting a Lawn Care Business' started by Poorboy's landscaping, Oct 30, 2012.

  1. Poorboy's landscaping

    Poorboy's landscaping LawnSite Member
    Messages: 40

    Hello guys. I have done some searching around the forums and really cant find my anwsers I'm looking for.

    I'm going to make another run at my own bussiness again. I was doing it while in high school but never went liget. I keep most of my stuff over the last few years and got state retro money so I picked up a few new things.

    1. I'm 21 still living home with Mom. All I own is my equipment, truck and Jeep. I do have a large savings account with money going to be used for a house down payment or retirement fund. That is all to my name.

    I was thinking of start my company new so I can tax write off the new trailer and mower this year. I have a few bi-weekly lawns now but it all family, still waiting to get paid.

    With that my big question is LLC or Solo proprietorship? I was thinking Solo because it be easier and I dont have much to lose. I would be getting 1 million in insurance to cover any damage I did. A friend has his own company and is telling me I need an LLC because it better for me. I can see him having it because he owns a lot of nice things and a nice house. I was thinking to start out as a solo and if all goes well next year retitle as an LLC?

    He told me about Legal zoom and they make it easy. I was going to do that because with my day job they make it hard to get to county and state places since we work that same hours. Has anyone used them?

    2. With taxs I know you can depreciate things and get money back. I was looking to upgrade to a F350 crew cab truck come spring Mid 2000. Can a solo write that off or only LLC?

    Any help would be great guys.
  2. larryinalabama

    larryinalabama LawnSite Fanatic
    Messages: 19,650

    Sole proprietorship is the eaisest. Be careful what you do its possible to have tax on your business and then income tax on what your business pays you. Also if you quit it cost more money to dissolve the LLC.
  3. Nate'sLawnCare

    Nate'sLawnCare LawnSite Bronze Member
    Messages: 1,001

    To do a sole proprietor, check with your county register of deeds or similar. I had to do a search to make sure my business name wasn't already registered, then fill out a registration form and pay $25 to the county office. You may, depending on your local requirements, have to obtain a business license. Good luck!
  4. CL&T

    CL&T LawnSite Senior Member
    Messages: 493

    Yeah, you don't need Legal Zoom to file a DBA (sole proprietorship). Fill out the form and file it yourself at with the County clerk. Do a Google search for "Brown's Lawn Service" to see if there is anybody near you using that name. Get a few certified copies as you will need to give one to the bank in order to open an account- "Brown's Lawn Service".

    Now, you could conceivably not even do any of that if you intend to use your real name and have customers make checks out to "Bob Brown." But it is best to file a DBA (doing business under an assumed name) even if it is yours and open a separate business checking account. You will want to then request a TIN (taxpayer identification number) from the IRS and, most importantly, a sales tax number (often it's the TIN the feds gave you) from NJ department of taxation because you will have to collect and remit sales tax. And believe me, you don't want to get on the wrong side of them so get that right.

    As for your tax question, if you are self employed in business you file a schedule C along with your 1040 on April 15 to report a profit or loss from a business or profession. The IRS doesn't really care if you are a DBA or use your own name as long as you report your income. If you make enough you will have to make quarterly "estimated tax" payments. Deductions for and depreciation of assets depends on what they are, new or used and other factors. That's why you should have an accountant to prepare your taxes at the end of the year. For the few hundred bucks it's worth every penny to stay out of trouble and do things right. You will also want to keep accurate business records, not just throw receipts into a box and give that and your checkbook to your accountant like some idiots do. I recommend an accounting program like Quickbooks. For a LCO the setup is simple, all accountants know it and you can just give him a copy on a thumb drive at tax time.
  5. mowerbrad

    mowerbrad LawnSite Fanatic
    Messages: 6,268

    I will first tell you that you should not be basing your decisions solely upon what you are being told on this site, we are not accountants or attorneys. I highly suggest you make an appointment with your accountant or financial attorney to discuss what will work best for you and your business.

    When I formed my LLC, I met with my attorney to discuss my options. From what I found, a Sole Proprietorship is easy and cheap to set up but offers you very little protection. Under and Sole Proprietorship, your business and personal finances are basically seen as "one", so if you were to have a lawsuit filed against you, they could go after everything you have from your truck, trailer, equipment to your house, personal car and other personal belongings. However with an LLC, it will separate your business and personal finances. Again, should you be sued, they could only go after your business, not you personally, so your house and other personal belongings would be safe.

    Be careful when you write a newer truck off on your taxes. A lot of people basically spend a dollar just to save a dime. There's more to it....

    Again though, make sure to make an appointment with an accountant or tax attorney to discuss your options. Spending a couple hundred dollars now, can make life way easier for you down the road.
  6. Shawn S

    Shawn S LawnSite Member
    Messages: 87

    I came here to post what mowerbrad did. Spend a few hundred dollars NOW for an attorney's and accountant's opinion. Each time I have started a business I have asked both what the best format is.
    If your choice is sole or LLC then IMO LLC is BY FAR the best way to go.
    I would ask an account and an attorney if you should go sole-proprietorship, LLC or S-Corp. If you choose one of the latter treat it like a business that is seperate from your personal stuff. The most important is that it has its own bank account.

    You must have a hell of an operation if you need a F350 crew cab to pull your mowers around. Whatever you buy, buy it with cash. Debt stinks. A business with little or no debt has a HUGE advantage over a highly levered business. I fail to see how an F350 crew cab will grow a mowing business unless you are strapping a 84" mowing deck under it. :laugh:
  7. CL&T

    CL&T LawnSite Senior Member
    Messages: 493

    That's not exactly correct. True, if a creditor filed suit for a debt incurred by the LLC they would only be able to collect from the assets of the LLC, not your personal assets. BUT creditors are smart to that and will require a personal guarantee which means that if you default they can go after you personally. So your LLC, S corp or even a C corp will not protect you.

    As for other suits, anything you are likely to be involved with as a small one man LCO is negligence. If they can show gross negligence on your part (say a rock gets kicked out by your machine and hits someone in the head making them a vegetable) your LLC, S corp or C corp once again will not protect you in a civil suit. Further, if your business is convicted of criminal charges the owners will be thrown in jail.

    So what is a corporate organization good for? Tax advantages, partners, shareholders, estate planning, all of which unfortunately a one horse LCO making 20k a year has no use for.
    Last edited: Oct 30, 2012
  8. Poorboy's landscaping

    Poorboy's landscaping LawnSite Member
    Messages: 40

    Shawn, The reason for the 4 door cab truck is so I can have 1 vehical for my house hold to go out in and a work truck. I have 2 big dogs, Family, ect. I figured it be cheaper to have a big work truck I can use as personal and work then looking into a 3rd one.

    Thank you, I think I'm going to do solo but gonna talk to my accounten this week. This is a side job, I'm a county mechanic and just using this as extra cash. I enjoy doing it and very good at it.

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