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LLC, Insurance, ETC ???

Discussion in 'Introduce Yourself to the Community' started by red07gsxr, Dec 24, 2007.

  1. red07gsxr

    red07gsxr Senior Member
    from meriden
    Messages: 256

    hello everyone. this is my first season plowing. i have 7 residential plow accounts and i have plowed them 2 times this year so far. i would like to know the advantages of going LLC. i want to be legit and have a tax write off. is it worth going LLC or should i go another approach. I need some advise. right now i have no insurance or LLC but all of my cutomers are very happy with my work, ALso how do i go about doing this and is it expensive. please some advise would be nice.
     
  2. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    for seven accounts?
    that isnt that many accounts. It would probably cost you as much as your making. then you write off the expenses you get a few peanuts back but the whole thing seems kind of like a waste of time to me.
     
  3. red07gsxr

    red07gsxr Senior Member
    from meriden
    Messages: 256

    i dont want to do it. i have recieved a few checks and have cashed them no problem. i just dont want to have a problem down the road b/c i dont have a commerical account or tax form. i do this on the side and that it. just extra cash.
     
  4. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    If you accept something for a good or service (ie: money for plowing snow) you are in business. Report it as business income and you're fine. Whether you decide to form an LLC, get insurance etc, is another matter. NOT reporting it as income is Income Tax Evasion and a federal crime. "On the side" is still reported as income.
     
  5. JayMac

    JayMac Member
    Messages: 95

    There are some really good threads on here explaining your questions. Just do a search for LLC. I think you'll find the general consensus is that you incorporate, have a company bank account, and most importantly have insurance. In short order, incorporation and having a different bank account will separate your personal assets from the company's like when being sued. Then and most importantly always have insurance to keep from losing everything if accidents happen. Now that is a very high level overview but again just search for LLC and you'll get all the answers you're looking for in more detail.
     
  6. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609


    yeah. they wanted to lock my kid up for having a lemonade stand. guess she pulled a profit at it.
    j/k
     
  7. red07gsxr

    red07gsxr Senior Member
    from meriden
    Messages: 256

    what if i except checks. can i get away with just a tax number or do i have to open a business account. i just dont want to get into trouble for something stupid. and do i really need plow insurance and if so what does it cover,
     
  8. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609


    you can just run a check through your personal checking or savings. then keep a record of income for the irs to report. if you dont have a bank account and if your having problems cashing a check, cash them at the bank they are drawn on. or have a friend sign the back and cash them for you.

    plowing insurance covers damage or injury caused by you plowing. it will not cover turf damage. it will not cover a slip and fall general liability would cover that. but if you hit a garage door it will cover it but you wouldnt want to claim it anyway because they would probably raise your rates and you would have to pay out your deductible first anyway. you really need to talk to the underwriter or see the policy first hand since there are many variables in policies and i wouldnt want to comment on specifics.
     
    Last edited: Dec 24, 2007
  9. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,580

    bribri for a guy that does not have a plowing business or INS you sure give a lot of advice.

    Organize your business, be it a LLC,LLP, etc etc.
    This will help you from loosing all of your personal assets from a law suite.
    There are many more reasons to go legit.
    Get the proper INS coverage.

    Go legit, don't plow for beer money like bribri does.

    If you do hit the garage door you may have no choice to ether pay out of your pocket or file a claim.
    They do not have to let you fix it, they can hire someone else to do it.
    Just in side my garage door is a 68 Dodge charger R/T, How much do you think it is going to cost you if the door should fall on it or someone in the garage ?

    Or if you peal up there asphalt, then what?
    Maybe bribri will let you live with him while you pay it off.
    Out of your own pocket of course..
     
    Last edited: Dec 25, 2007
  10. John Mac

    John Mac Senior Member
    Messages: 374

    If the check is made out to a business name you can't just go cash it. You will hit something, so be ready to fix it out of your pocket because your insurance won't cover it as it is now. You don't have to be LLC you can be DBA, cost about $25 at the county court hose. Plowing just like anything else has to be se up correct, either you are in or out, no sitting on the fence.
     
    Last edited: Dec 25, 2007
  11. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,580

    You need to have a business to be doing business as.........
    File for a llc llp,etc etc cost under $300.

    Doing Business As " joes plowing" does not separate your business assets from your personal assets.

    Then go to your bank and set up a business account.
     
  12. Snowpower

    Snowpower Senior Member
    Messages: 636

    Which brings up an excellent point and exactly why I have NOT formed an LLC or Incorporated......yet.

    The majority of people dont have enough "assets" to worry about losing, or anyone going after in some "Major Lawsuit"

    Most lawsuits are nickle and dime pay me some cash and Ill go away deals.
    The rest of them wont generally go after your personal assets UNLESS you dont have proper insurance coverage to satisfy them or their losses....or percieved losses.

    I hear often that people are worried about losing their home in a lawsuit. Have you ever even heard of that happening? No. And why? Because you and I dont OWN our homes.

    They would have to sue the bank to get it.

    Same with a lot of your other items or so called "Assets". You dont really own them and the lawyers know that.

    Much to their shagrin.
     
  13. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,580

    You could not be more wrong....
    They can take everything you own and will ever own to satisfy a judgment against you.
    They can and will garnish your pay for the rest of your life to satisfy the judgment if need be.
    They will and can take any tax refund you may receive for the rest of your life if need be.

    IT DOES happen and it can happen to you just hurt someone...
    Don't fool your self.

    The other guys lawyer will go after everything you have and any furture moneys to settle the judgment...


    The bank may own 80% of your house, their lawyer will force the sale for the 20% you own
     
    Last edited: Dec 26, 2007
  14. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

  15. MrBigStuff

    MrBigStuff Senior Member
    from Boston
    Messages: 140

    Yeah, I always found that argument against having insurance to be astounding. "But I don't own anything of value therefore I don't need any insurance"

    My response has always been, "And if something happens, you never will".

    They can only take all of it couldn't be farther from the truth. In the real world there are real numbers and they can go negative.
     
  16. Snowpower

    Snowpower Senior Member
    Messages: 636

    I didn't say you dont need insurance. You certainly do, but most new operators can get away without incorporating right away is all.

    Eventually its a wise decision, and has protections and some tax benefits.

    Lawyers can go after anything they want SF. It's true. It's rare that a judge or jury will be completely unreasonable against a small contractor unless he is completely negligent, in which case he should pay through the nose.
     
  17. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Caution on this: Snowfarmer covered some of it, but there are other implications. Realize that the mortgage (or loan) is not the same thing as the asset it's associated with. The bank loaned you money with a promise to get repaid. If you lose your house, truck, etc, through foreclosure, reposession or any other court order, you still owe the money - you just don't have the asset. Often, it is in the loan papers that if you do not have the asset, the entire balance of the note becomes due and payable immediately. Also, if any of the note is written off or otherwise adjusted by the lending institution, the forgiven amount is considered income by the IRS and taxed accordingly. Also, lets say you have insurance to cover $300,000. The award is for $3,000,000 spread over two defendents (you and the property owner). The judge has decided your share is $1,000,000. Your insurance will pay $300,000 and you still owe $700,000, plus atty fees and court costs. This is where their atty will file to force sale of assets, garnish wages, winnings, tax refunds etc. So, yes, you can and will be sued regardless of your financial situation. The result can be disastrous for years to come. Yes, the lawyer will go after "deep pockets" but also shallow ones because now he's getting paid for what he does, not on contingency basis like the initial lawsuit.

    So, can you really afford going without insurance?

    (I was drafting this while Snopower was posting)
     
  18. Snowpower

    Snowpower Senior Member
    Messages: 636

    I never said no Insurance!!!!! :cry: lol

    Im insured for 2 million GL and up the ying yang....750,000 I think on my vehicle. Everyone should be.
     
  19. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609



    :drinkup: beer money. :D
     
  20. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,580

    :rolleyes:I hope it's at least good beer:waving:


    Thanks Mick thats what I was trying to say...
    You are 100% right.