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Separate snow plow company from your landscaping/construction business

Discussion in 'Commercial Snow Removal' started by Dan082, Jan 5, 2016.

  1. Dan082

    Dan082 Junior Member
    Messages: 8

    Does anyone separate their snow plowing company from their other business? Will separating your companies help you if/when you have a claim?
    Does this effect you at tax time or when you go apply for a business loan and your gross sales look low because it's missing a big chunk of the snow money?
     
  2. Philbilly2

    Philbilly2 2000 Club Member
    Messages: 2,541

    They guy that will give you the correct answer is your accountant and your lawyer... everyone's case is different.

    I did it for a while... it is a book keeping and logistics head ache. If they have a good lawyer, it will only protect you so much. It does help though. I mostly did it for different reasons involving unions was the main reason as my construction company is union based, but snow removal was not.

    When you go for loans (at least in Illinois with a S-Corp) your taxable income threw the Corp is placed on the shareholders as income. So the bank knows what they need to know from your personal and S

    Also, lawyer made it very clear that construction property (trucks/ loaders) was not to be used by snow company unless rented with proof of rent, COI with Construction Corp listed as additional insured, invoice and receipt of payment in both sets of books (ie - one corp writes a check to another corp) stupid I know, but it reduces your construction corps liability.

    Another downer is 2 insurance polices... if you want the true separation... not just a ryder on construction corp, a hole different policy.
     
  3. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,035

    Other than the headaches that were said above I'm sure the correct answer is yes split it. I am too small and I need all my money in one pot. Because winters are so different every year I try and only use snow money for snow things and same with the other part of the business. I wouldn't want my full time work supporting my snow side of things year after year. It's also easier for me with books, and insurance. I do try and get all my overhead paid for in 9-10 months and have money for bills for the winter months already sitting in the bank.
     
  4. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 629

    for years i kept my pool business and my plowing business under one company and it worked well. i dreaded having to make two companies with two insurances and two sets of quickbooks. my insurance person and my accountant both informed me that once my snow revenue exceeded 25% of my total revenue i would need to open another company. this information was purely insurance driven, it didnt have anything to do with taxes or any thing legal. it only dealt with liability in case of slip and falls. talk to your business insurance agent about it they should be able to help you out.

    what i did was have 1 company own all of the trucks and inventory, 1 company perform the pool work and 1 company perform the snow work. this way if one of your working companies gets sued, they can not touch your assets such as trucks, and inventory. this is a very good way to protect your self. my insurance agent, accountant, and lawyer all told me to do this ASAP. you set it up so that your 1rst company owns all the assets and leases them to your "work performing" companies. to do it correctly you will need to set up legal documents showing the lease of equipment to the other company. it sounds confusing and annoying but it is totally worth it if one of your guys messes up in the middle of the night and hits somebody or something. and we all know we have at least one of those guys. there is a website called formswift.com that you can use for all of the documents, so it makes it a simple and easy process. for the additional companies i used legal zoom, it costs about 100 dollars more than opening them your self but they do all the paperwork and running around for you. its nice.


    Good luck.
     
  5. Dan082

    Dan082 Junior Member
    Messages: 8

    Thanks for the replies guys! I have both business's set up - my newer one has been setup for 2.5 yrs just non operational.
    I know it is a paperwork night mare and I am not that large yet - I have both companies insured for wc, gl and auto- the auto I am transferring one truck to the new snow plow business to open my auto policy with for when they write COI's.
    I am just concerned that when I go buy a piece of equipment that they'll look at my gross sales for the original company and they will be short at least $50k but then again my personal tax return will say the full amount that both businesses profited- tough call
     
  6. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 629

    you can leverage your self what ever way you need to. you can show your business and then your personal financial statement and as long as it shows profitable your fine. i have terrible personal credit from when i was a teenager, and i was able to purchase a new cat 272d skid steer and two new vans from ford last year. my company showed a little over 100k in profit and it was fine. i had to put a little more down up front but it all worked out.
     
  7. Philbilly2

    Philbilly2 2000 Club Member
    Messages: 2,541

    My favorite statement my banker ever said to me when I went in to get the paperwork done for my shop loan...

    "A bank is simply a financial institution that will only loan you money if you can prove that you don't need it."

    :confused:
     
  8. KildonanSnowRem

    KildonanSnowRem Member
    Messages: 83

    What if it is lawn care and snow removal? Does anyone run it as two separate companies? If not, what is the equivalent of a DBA but in Canada. I am not sure how I can just register my lawn name as a name that I use and then have the snow company as the business name. (Hopefully that makes sense).
     
  9. Philbilly2

    Philbilly2 2000 Club Member
    Messages: 2,541

    [​IMG]
     
  10. KildonanSnowRem

    KildonanSnowRem Member
    Messages: 83

    Sorry - I realize that made no sense and I found my answer now anyways! Thumbs Up
     
  11. Broncslefty7

    Broncslefty7 Senior Member
    Messages: 629

    haha, thats a classic