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question about starting LLC

Discussion in 'Business Fundamentals' started by stangman35, Sep 5, 2007.

  1. stangman35

    stangman35 Senior Member
    Messages: 267

    Im trying to decide if it is worth being an LLC.What are the advantages and disadvanatages of it.

    Right now all it would be for is the plowing,I have a normal job the rest of the time.

    Any info would be great.

    Thanks Mike
  2. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,926

  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    It really doesn't matter what your "other" job is. When your plowing you need to be protected if anything happens i.e. insurance.
  4. stangman35

    stangman35 Senior Member
    Messages: 267

    I work for a large farm,dont own it.


    Insurance is a must either way.I just wondered what the benifets are
  5. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,926

    Sure it does if he owned the farm it would be set up as a business allready and this business could also offer snow removel/plowing.;)

    Here is some info from the thread /link i posted,


    Never A Dba

    I started my lawn/snow company as a DBA. A quick story to explain why I switched to an S Corp:

    One day I was cutting a new lawn in the summer that hadn't been cut in weeks. There was a public water access pipe under the 8" of grass that I didn't see. Ran it over with my Zero-Turn mower. It sliced right through the 1 inch pipe like a twig and sent it flying into the street. On the other side of the street there was a little girl riding her bike. If it had hit her, it could have killed her instantly, and with a DBA I would have been personally sued. Every dollar I made for the rest of my life would have been to pay off my lawsuit. If you have a corp or LLC, then only the business assets can be taken in a lawsuit. They can't attack your personal assets or your home.

    An S corp offers "pass through taxation" which means that all net profit is added to your personal tax return as taxable income at your personal rate. LLC's are easier to handle as far as record-keeping, but I have been surprised by a little fact. for an S corp you're forced to show balance sheets and income statements which can easily be done yourself on a spreadsheet. I bring it up to speed monthly, and it has forced me to take a closer look each month at what I'm spending, and what I'm brining in. It forces you to identify the finanical flows of your business, and helps you run it more efficiently. Also, an S corp has "shares" just like any other stock company. This makes it much smoother when you decide to sell your business, or bring in a partner. It also shows a larger separation from your personal finances, which makes it much harder for someone to sue you personally for things done by the corporation.

    With an S corp you need a board of directors. As the President of the corporation you can decide that you and your wife are the directors. You're president, and she's an officer. you are required to meet annually to discuss the future of the company. So, if you ever get audited, you jump on your computer, and write down some of the things you've talked about, and decisions you've made for your company. Hit print and you're all set. Or keep a log book throughout the year of decisions you've made and things you've talked about. On Valentine's day take your wife out to dinner and discuss some of the things you've done in the past year, and things you're going to do next year. There's your annual meeting, and you have the notes to back it up.


    "LLC" or a "Corp" will separate your personal assets from your business assets.

    I think you will be fine with an LLC but I'm sure othere will give there thoughts also.
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    That's kind of like all your eggs in one basket. You should keep all your business separate. If you run an old lady over you don't want her taking your cows.
  7. stangman35

    stangman35 Senior Member
    Messages: 267

    Thanks for the link,iv been reading through it.Im just tring to figure out if it will help with writing off things like the plow,fuel costs,ect.

    Its not so much for the liabilty standpoint,more for the financial.

  8. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,926

    For that you will want a good accountant/tax person.
    You can depreciate a piece of equipment that is owned by your business ie, plow truck
    You have a hard time doing this if you use your personal vehicle for work.
    Sell your truck/plow to your business.
    Last edited: Sep 5, 2007
  9. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    As they say check with the lawyer and accountant . If you show lost for 3-5 yrs the IRS may disallow it and say it's a hobby.
  10. stangman35

    stangman35 Senior Member
    Messages: 267

    Yeah my sister is an accountant,havent got a chance to talk to her about it.

    just tring to find out how some of the guys on here do it.
  11. Spinman710

    Spinman710 Member
    Messages: 47

    There are some tax differences as well (or so I've been led to believe) between an LLC and an S Corp. Some benefits are better than others. Check with your sis and see what one benefits you the most...

    I have to do the same. I work for myself as a design consultant, so plowing is yet another 'division' that I need to startup...
  12. Turkey

    Turkey Member
    Messages: 77

    I'm in the same boat on this one. Looking to get a LLC going for liability and to protect the house and retirement funds etc. Chatted with a local lawyer and she suggested starting two LLC's. One to operate the snow plowing business, and the second at a "leasing" LLC which would hold the equipment and lease it to the snow removal business. I guess this double protected my truck since it's also my daily driver. If the snow removal LLC was involved in a lawsuit it would have little to be taken. The equipment wouldn't technically be owned.

    Anybody else get this response or have a business set-up like this??
  13. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    i did at one time. the headache value and expense of it wasnt worth it. i actually have been considering it again for the last month and opted against it. reality check! your starting two llc's to plow snow? how much snow? what kind of accounts? are you doing it just to give money to the lawyers, accountant and insurance company? how much money will you be making on this? you work another job so i cant imagine your going to be making a ton of cash and doing many accounts. if you have to go through that much headache to make a grand this winter i would suggest just not doing it.
    i have crap i write off now on property i own and self employment on top of a regular job. eventually you have to stop looking for ways to write things off/protect yourself from liability and admit you need to find realistic ways of making money without paying it all out to others. i think im just having a moment dont mind me. looking back i realized i paid out as much as i made and the people i paid it to werent the ones doing the work. having write offs and protecting yourself is good but i think it comes to the point that your spending more time doing that than what you should be doing which is making money.
    :rolleyes: jmo
  14. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,926

    :rolleyes: :dizzy: ...............
  15. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    so your telling this guy to go spend four grand to make a grand? then spend another countless hours dealiing with red tape bs while not being paid? no. im not kidding at all.
    if it was his fulltime job i wouldnt deter him from it. i dont see this as a viable business for him (except on expensive gold paper).
  16. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 7,926

    Where did you get this ## from your but?

    It only takes a couple of hundred $$ to register a LLC,LLP,or A CO

    When his snow plowing business or a litigants lawyer names his leasing Co in a suit he will need a separate ins policy and yet another lawyer will be involved.

    He has a good idea having two business.
    AS I to lease my vehicle to my plowing business.
    I wonder if renting would be cheaper..lol
  17. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    The multiple LLC thing is a scam.
    You should absolutely have an LLC (or corp) to protect your busines assets from your personal
    and to allow you to take full advantage of all the tax laws for small businesses.
    But, having multiple LLC's is just a paperwork nightmare.
    So, pretend you get sued, the lawyer comes and figures out who owns what (that's what lawyers do) and says to the judge "hey, this guy has multiple business's just to play games no real reason" and the judge says "good bye"
    It's called piercing the corporate veil.
    Just like you have to signature gaurantee your loan agreements for your LLC, even if it's a business making money, same problem.
    Now, if you have two completely seperate business's that have no real need to have their business's joined (i'm thinking owning a rental house and a snow plowing business) then it may make sense. But normally and in the situation you describe, no, it's just less than optimum.

    Besides, now not only all your administrative costs doubled (two phones, two bank accounts, etc etc etc) but now you need double the advertising to get your brand awareness going.
    it's a bad idea.
  18. Turkey

    Turkey Member
    Messages: 77

    Last season was my first year plowing. I got a late start, didn't get my plow installed on the truck until mid-December, then missed a week while on vacation in January. In the end, I broke even on everything including paying entirely for the plow. I sub-contract for my father-in-law, mostly commercial lots. There's plenty of plowing this year, another local landscape company is going out of business so he's been slowly picking up some of the available accounts.

    There are alot of the double LLC or INC around. A couple I've noticed are some of the local appliant/electronics store/chains. You'll always see Joe's Electronics, but if you look closely at their delivary truck they'll say owned and operated by Joe's Transport. This way if Joe's truck causes an accident he could possibly loose his transport business (ie his delivary service) but not his entire appliance/electronic store. I see more and more heating/plumbing companies doing the same thing.

    I agree the double LLC suggestion from my lawyer seems like a lot of hassle for a one truck operation. I'm most likely will set-up one LLC for liability as I'd like to pursue some of my own accounts and get the finances of my snow business separate from my personal to better track income/expenses/tax deductions etc.
  19. Turkey

    Turkey Member
    Messages: 77

    Forgot to mention, the lawyer fees for setting up a LLC correctly (with an operating agreement) are about $300-$400. Not a big deal for the liability protection it will provide when done properly.
  20. Spudgunner

    Spudgunner Member
    Messages: 40

    My wife did her own LLC for her biz. Here in Idaho it is pretty straightforward; however, if you don't have the time an attorney can do it for you. I had an attorney do mine and it was closer to $1000...as I didn't have the time to do it myself then (or I would have). You might contact your Secretary of State office for instructions and then just do it yourself.

    An S-corp seems like more trouble than it's worth to me...for a microbiz...but that's DEFINITELY one of those "Your Mileage May Vary" types of things.

    Good luck to you.