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Want to go completely legit how to do it.

8K views 37 replies 11 participants last post by  Rll131 
#1 ·
I have about 15 accounts right now a 4x8 trailer snapper 36 pro wb echo blower trimmer and edger. All my accounts either pay me by check for the whole month or when I'm done the job they pay cash or check made out to me personally. I don't need a license for mowing in md , went to the courthouse also asked about needing a dba she said I only need one if I want the checks to bE made to a business name that I advertise with but all my customers just make it out to my personal name. Also haven't payed any taxes either. First year doing this on my own so please don't call me a low life or what not. Just need some advice on what to do first and how to properly bill my customers and get paid. Next year I will be going 100% at this I worked at a golf course for 4 years so I have a decent amount of experience but wanted to try this out first to see how it went before I went legit with taxes insurance ect. So what would be my first step keeping expenses as low as possible. I also have Paypal here but only 1 customer uses that.
 
#3 ·
Collect checks without being legal. I think someone is not the sharpest tool in the shed.

Even checks made out to cash can be traced back to you. If the gov wanted to go after you for back taxes you are toast.

I tell my customers I have to charge sales tax. They say they will make the check to cash. I tell them the IRS will not believe I have that many aunts and that many birthdays.

Also there is a guy on here, procut. His story is a lesson to keep personal money separate from business money and at two different banks. Maybe he would of not lost his business.
 
#4 ·
What do you mean collect checks without being legal? Why am I not legal there personal checks made out to me personally. I don't need a license in the state of md nor do I need a dba. Basically just want to know what kind of insurance I need to get and how to pay taxes?
 
#5 ·
general liability insurance is what you probably want. should range from $300-$700/year for $1million dollar insurance.
you might want to get some help with your taxes since you have a business. maybe they can show you how, and you can do it own your own after that if you feel comfortable.
 
#6 ·
Basically by taking personal checks that is money made through your "business" you are doing what they call "tax evasion" if the IRS was ever to come down on you. Here is what I would do to solidify your business from the start to give you a solid foundation. You'll never be a business with taking personal checks and cash.

1) Figure out a business name, then form your business. Don't waste your time on a DBA if you want to have an actual company. There are many forms of incorporation to choose from, but your best bet is to become a Limited Liability Company (LLC). It doesn't cost much to form, and you can even do it online. The tax rate isn't to bad, and you do all your business tax through your own personal 1040 at the end of the year.

2) File for a EIN Number. Every business needs one. Sales Tax license is completely dependent upon what your state requires. For example, I don't need one for what my company offers. Now say I wanted to run my service aspect of this business, and also open up a landscape supply store, then I need to have a Sales Tax License. Basically, if you are offering a PRODUCT, chances are you need a Sales Tax license. If you are offering a SERVICE, you most likely don't. Like I said, just check with your state.

3) Now you're an LLC and have your EIN, now you can accept checks with your company name! But you can't deposit them in your personal acct or cash them at a convenience store, so go open up a business checking and savings acct at your local bank.

4) So you have a licensed business, an EIN, and a bank acct, youre ready to rock and roll....almost. Now you need a Commercial Liability Policy. Find a policy with a $1 to $2 million aggregate. Throw your truck on the policy. It will get classified as commercial/personal use. Youre trailer will be covered while being towed.

5) Now you have a business name, it's registered with the State AND IRS, you have a bank acct that can track everything for the IRS, and you're insured. You can do this in a matter of a week, and the only thing it costs you is whatever you pay to form the LLC (Like $200).

There are many aspects to running legitimately, but this is a good start.
 
#8 ·
I knew a painter who built his business rapidly. I think he started out just as a weekend thing for 'extra money', but ended up doing it full time rather fast. I dont think he paid 1 cent for taxes and had checks made out to him. IRS came down on him and hit him hard for back taxes. Long story short, he lost his business. I think he is working for Kia on an assembly line now
 
#9 ·
I would definitely advise you to take these peoples advice and talk with an accountant. It's much better to get your business advice from someone who deals with the legal aspect in your state such as a CPA or tax attorney, not a forum on the internet. Not that people on here are not a wealth of knowledge, believe me they are, it's just that every state has different regulations, and not everyone knows what you need.
 
#11 ·
No problem. It's pretty much the same across the country when it comes to formation. The only difference is licensing. Some require you to file for a landscape license or a contractors license. Talk with a CPA and call your state, best advice I can give.
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#13 ·
Cody do CPA's give free advice? For instance if I email one from a local firm will they charge me.
It really all depends. Most should answer you, some might need you to come in and go over things with you to try and get a buck out of you. It really depends how big they are. I would just send an email and you should get a response. They might be willing to help with advice because if you get to the point where your company needs a CPA, you might just use them!
 
#14 ·
This I what I have found out so far. I don't need a dba or business license in md. If I want insurance I can get insurance but is not needed. I ended up setting up a separate personal checking account for checks and Paypal here all checks need to be made tome personally. Also ill be paying a schedule c 1040 tax return which I can write off a lot of equipment miles ect. (In the process of getting insurance dont want to risk it). I found this old post also this is exactly how lawnlubber ran his business. Don't need I Ein either since I have no employees. CPA just told me all this and of course offered to do all my paperwork/taxes for a fee.
 
#16 ·
This I what I have found out so far. I don't need a dba or business license in md. If I want insurance I can get insurance but is not needed. I ended up setting up a separate personal checking account for checks and Paypal here all checks need to be made tome personally. Also ill be paying a schedule c 1040 tax return which I can write off a lot of equipment miles ect. (In the process of getting insurance dont want to risk it). I found this old post also this is exactly how lawnlubber ran his business. Don't need I Ein either since I have no employees. CPA just told me all this and of course offered to do all my paperwork/taxes for a fee.
Okay. First off, that post is 9 years old, completely outdated information. So you're not going legit, you're going to continue to be an individual recording "other income". You aren't creating a business at all. To be a business, you do need to have a registered name. You do need an EIN. You do need insurance. How are you going to write off anything when you have no business? It's not like its a personal 40 hour a week job that you bought some tools for so you record it on your 1040. How are you going to get a commercial liability policy with no business to put it under? How in the world can you be "legit" with none of this. I'm not trying to be cruel, I'm just curious how you can be a legitimate business at all. I understand it varies from state to state, but EIN, LLCs and S-Corps, are FEDERAL regulations, not STATE. The IRS, as crooked as they are, is a FEDERAL government agency, therefore their regulations regarding businesses are the same across the board. No offense, but you aren't going legit, you are staying under the table. I would highly reconsider not registering your business name, not getting a EIN, and not getting a business acct.
 
#17 · (Edited)
Sounds like you finally got some good information from the CPA. Most of the information in this thread is worth less than you paid to get it. You absolutely can run as a sole proprietorship or "DBA". If your customers are ok writing checks out to you personally then that's good enough for starting out. There are advantages to an LLC as your business progresses but for $0 formation cost you can operate as a sole proprietorship until you have finances available to form an LLC or whatever other type of organization best fits you.

Collecting personal checks for work done isn't tax evasion it's called collecting for work performed. Not paying taxes on those checks is called tax evasion. Every tax return program in the world gives you an option to claim additional income not registered on on a w-2, that would be where you claim the additional income. As long as you keep good records of the money you make and checks you cash through the business and make sure to file all of them at tax time you will be just fine.

Insurance is a very good idea but again as you posted not required (it is required in some areas). A commercial policy on your vehicle is required or a claim will be denied if you're using your truck for the business at the time of the accident.

EIN is only required if you have employees, not required for a sole proprietor however you can get one and it's an extra bit of protection to show the IRS you're here and you plan on paying your taxes.
 
#18 ·
The CPA I talked to said I didn't need any of that. I have another appointment at 2 tomorrow for more advice. H basically told me I am self employed and I can pay my taxes with a 1040. I am getting insurance 300,000 policy. Ill be headed to my local courthouse for more information and ill let you know what the guys tells me tomorrow. I do want to be legit just seems the only diffrence is I would be able to have checks made out to a business name instead of a personal name.
 
#21 ·
I guess it just comes down to what you want to do with your business. If you just want to make a couple bucks on the side and not worry to much, then I guess you'll be okay. I'm just saying there are reason's for certain things.
The EIN, whether you need it or not, is nice to have. It's free to get and you can do it online. It's nice to have when it comes to mapping your taxes and write offs. It helps the IRS when it comes to your bank accts, and things such as insurance purchased through your company.
I just cant see how you can be a company that wants to grow without some sort of legal formation from the start.
As long as you are talking with a CPA then that's all that matters, its better than anything on here.
 
#22 ·
Believe me I'm beyond confused at the moment. I'm hoping tomorrows apt will be much more informative. I basically want to have 30-50 lawns a week solo and that's it nothing more nothing less. But I also don't want to get into any IRS trouble or trouble if something should happen on the job for instance rock through a window. Here's a question will commercial properties not hire because I'm not a llc currently? I'm only up to 15 accounts rot now but plan on going full time the golf course I was at closed down.
 
#25 ·
Many commercial jobs will not hire you without a million dollars in general liability, some will also not hire you without an EIN.

I would personally setup a Business name, LLC, separate business checking account, general liability, commercial auto, and file for an EIN. You might not need all of it where you live, but I'd sure feel better having it.

Customers will also take you much more serious if you have a business name. I wish you the best of luck!
 
#26 ·
Many commercial jobs will not hire you without a million dollars in general liability, some will also not hire you without an EIN.

I would personally setup a Business name, LLC, separate business checking account, general liability, commercial auto, and file for an EIN. You might not need all of it where you live, but I'd sure feel better having it.

Customers will also take you much more serious if you have a business name. I wish you the best of luck!
I should point out, this is also what I would recommend but not the minimum required to be "legit"
 
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