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Starting out, should I go DBA or LLC?

Discussion in 'Business Fundamentals' started by NYH1, Jul 4, 2015.

  1. NYH1

    NYH1 Senior Member
    Messages: 129

    I'm about to start my business (go legit anyways). I don't know what would be better, doing a DBA or a LLC? I plow snow in the winter and mow lawns in the warmer months. It's just myself and my son (13) helps me from time to time with the mowing and rides with me a lot while I'm plowing.

    I don't make a lot of money. I more less do it for something to do and to put a little extra money in our pockets. I make enough to cover my expenses (insurance, fuel, supplies like trimmer string, tires ect.). All my equipment is paid for.

    I don't plan on hiring anyone. I'll probably pick up more mowing work as we go because my plowing customers are asking me about mowing. I like plowing more then mowing so I am busier in the winter then the summer as long as it snows. I do mostly residential plowing but have the opportunity to get some commercial plowing.

    So what are the pro's and con's of each?

    Thanks, NYH1.
     
  2. Camden

    Camden PlowSite Fanatic
    Messages: 6,598

    Single member LLC. I'm on my phone so I can't write a long post but just Google it and you'll learn a lot.
     
  3. snowplower1

    snowplower1 Senior Member
    Messages: 774

    I'm certainly no expert in the llc and dba stuff but i do know we switched from a dba to an llc a few years ago. an llc protects your assets, house, cars, anything personal in a worst case scenario. i believe an llc might cost more but that could be totally wrong. someone has to know
     
  4. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    LLC, it doesn't mater how much $$ you make or the # of employees or if you plow drives or parking lots.
    It's about separating your assets from the business assets.
     
  5. Bolt-1

    Bolt-1 Senior Member
    Messages: 103

    Agreed 100%
     
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Of course you all ready have your FIN#
     
  7. Bolt-1

    Bolt-1 Senior Member
    Messages: 103

    I thought that was E.I.N.
    Sorry i know you have fat fingers:waving:
     
  8. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    Do you have an FIN???Thumbs Up
     
  9. Randall Ave

    Randall Ave 2000 Club Member
    Messages: 2,015

    Go talk to a CPA, have your expenses, yearly gross, etc for information, you will get the answers you need. If your kid is on a payroll, will need workman's comp. People will argue this. Do you have to collect sales tax in your state?
     
  10. Dogplow Dodge

    Dogplow Dodge PlowSite Veteran
    from NJ
    Messages: 3,013

    I'm DBA, and always have been. The only time it's an issue is if you get sued. If you do something whereas you most likely aren't going to be sued for "performing your best" than I wouldn't worry to much about it.


    DBA is the LEAST expensive of business entities. I was talking to my accountant last year, and he was trying to convince me to go LLC (not that I hadn't already thought about, and was already considering it) but when he told me how much more his fees were to do my taxes, and how much the "fees" in general for the state were, I put it back on the back burner....

    DBA... yes you are subject to losing everything, but it also reminds you to not do anything which would jeopardize your business or personal wealth.

    Not sure if a LLC protects you against everything, as if you're found to be negligent (personally), then I don't believe it will stop you from paying the piper.

    Each state is different, so a tax adviser and lawyer in your state are who to contact.
     
  11. peteo1

    peteo1 PlowSite.com Addict
    Messages: 1,660

    Well it is shark week
     
  12. Randall Ave

    Randall Ave 2000 Club Member
    Messages: 2,015

    You can be as carefull as possible, but things happen. And sometimes people are looking for a payday. (Especially in Jersey). If your very small, an LLC will only protect you so much. These are questions like Dogplow said, for an accountant and an attorney. And yes I have been sued.
     
  13. seville009

    seville009 Senior Member
    from CNY
    Messages: 740

    An LLC provides liability protection. You have to use it properly though, or else you risk losing that protection. For example, if uou tell a client to pay you personally instead of running the receipt thru the LLC, then the LLC will be ignored.
     
  14. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Anyone in the snow removal business should be incorporated. Whether an LLC, LLP, Sub-chapter S, etc. is a question for your lawyer or accountant (or both.) Lawyers like LLC but I think thats simply because they make more money. Reporting and record keeping are a little more complicated in a LLC then a Sub chapter S corporation.

    Subchapter S is very close to DBA but is taxed as a corporation and provides the liability protection, minimal paperwork required, all profits and losses are passed though to your personal income tax calculations. You either personally pay the taxes on profits or take the deductions if there are losses.

    Also allows you to take a good deal of your income as "corporate dividends" as opposed to wages and save the money on SS, Unemployment, WC, etc.

    Again talk to a tax professional (or two) before making a decision.
     
  15. seville009

    seville009 Senior Member
    from CNY
    Messages: 740

    Bookkeeping and record keeping is basically the same for both. An LLC is taxed as a partnership, whereas a Sub S, while similar to a partnership, has basis rules, which can cause issues.

    Basically, LLC's replaced Sub S corps once the specific States adopted the LL statutes

    I used to be a tax accountant.......
     
  16. NYH1

    NYH1 Senior Member
    Messages: 129

    Thanks for all the info guys/gals. Of course I plan on talking to my lawyer before doing this. I just wanted to hear some of your opinions to see how you guys/gals have your businesses set up. I know some of the members here are also in New Yorkistan too.

    Thanks again, NYH1.
     
  17. fireside

    fireside Senior Member
    Messages: 661

    I have one better in my state you can be a LLC operating as a DBA leasing all equipment from LLC to the DBA! It comes down to limiting your exposes and gaining the best tax benifits in your personal situation. You need to talk to a lawyer and a CPA. Now doing that you have two levels of protection!
     
  18. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    ^there is no additional protection for the DBA as it is listed under your LLC or tax advantages.
    You should talk to a knowlag able tax person that knows about business.


    Some do this becuse their LLC has a bad reputation.

    Tims tree service llc also has a DBA of jacks stump grinding.

    You could put all or your business at risk becuse of what happens with another one.

    It's best to keep them all separate, there making money right? So you can afford to hire a cpa for your taxes...


    "A business owner can have many different business ventures under one LLC, by
    filing for a DBA for each venture. The pros to filing multiple DBAs under the
    same LLC, is that all of the business ventures will be taxed together as one.
    The con with having so many different businesses registered as a DBA under
    one LLC, is that if something happens to one business venture, it will effect
    every business under the LLC. For example, if a guest at a Bed and Breakfast
    slips and falls and sues the company and the LLC is found liable, all of
    assets of each business venture could be jeopardized. Whereas if each
    business venture is set up as an individual LLC, if something happens to one
    business the other businesses are protected."

    https://www.sba.gov/
     
    Last edited: Jul 7, 2015
  19. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    While I have the "soap box"out.:laughing:

    Be carefull with putting a DBA under your LLC.
    as it could be just your EGO... working...

    Piercing the Corporate Veil.
    "There is no real separation between the company and its owners. If the owners fail to maintain a formal legal separation between their business and their personal financial affairs, a court could find that the corporation or LLC is really just a sham (the owners' alter ego) and that the owners are personally operating the business as if the corporation or LLC didn't exist. For instance, if the owner pays personal bills from the business checking account or ignores the legal formalities that a corporation or LLC must follow (for example, by making important corporate or LLC decisions without recording them in minutes of a meeting), a court could decide that the owner isn't entitled to the limited liability that the corporate business structure would ordinarily provide.
    If a court pierces a company's corporate veil, the owners, shareholders, or members of a corporation or LLC can be held personally liable for corporate debts. This means creditors can go after the owners' home, bank account, investments, and other assets to satisfy the corporate debt."

    "If the owners fail to maintain a formal legal separation between their business and their personal financial affairs, a court could find that the corporation or LLC is really just a sham (the owners' alter ego) and that the owners are personally operating the business as if the corporation or LLC didn't exist. For instance, if the owner pays personal bills from the business checking account or ignores the legal formalities that a corporation or LLC must follow (for example, by making important corporate or LLC decisions without recording them in minutes of a meeting), a court could decide that the owner isn't entitled to the limited liability that the corporate business structure would ordinarily provide."

    just something;) for thought....
    and why a LLC is a good idea, than just going out to do business without "organizing" your business.
     
    Last edited: Jul 7, 2015
  20. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Funny my accountant and lawyer both disagree with you. Not that one is always better but they are not interchangeable. Kind of like Camaro and Corvette, you can't just say the Vette is faster as the base level Corvette can't hold a candle to some of the available Camaro models. Every case need to be looked at on an individual bases.

    Don't misunderstand i am not lobbying for Sub chapter S I am just suggesting he have a couple opinions (Professional not us Plowboys, not even the ones that stayed at a holiday inn last night) before choosing, tax liability and civil liability are not the same.

    Why I suggest talking to a professional (or two) before deciding how to structure your company, every state and business is different.
     
    Last edited: Jul 8, 2015