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The whole "business" thing

Discussion in 'Introduce Yourself to the Community' started by MSF, Dec 8, 2009.

  1. MSF

    MSF Junior Member
    Messages: 8

    Hey I'm Mike and new to plowing. I bought my truck off a friend who has plowed (for someone else) for years, so he has quite a bit of advice about the plowing, but almost no advice on the business end. I plan on going real light this winter, but if it seems profitable, and time allowing, I might decide to make it a business. What do I need to do to have a business name & collect income/claim income? Is it as simple as getting business cards with the name and claiming the income on my taxes, or do I need to do quite a bit more?

    Also, if I am plowing friends/family for free, do I need commercial insurance? My agent told me my regular policy would be ok for this, but I'm not so sure they'd back that up if I hit something. Thanks a bunch guys! I hope to be the guy giving advice after doing this for a while!
     
  2. Wayne Volz

    Wayne Volz Senior Member
    Messages: 694

    Family and friends

    Be careful. Family and friends are always hard to please. If you decide to go serious into this business check out www.profitsareus.com for a complete bidding and contracting package for snow & ice management.

    Good luck this year with family and friends. :waving:
     
  3. MSF

    MSF Junior Member
    Messages: 8

    I'm not worried about pleasing them too much. If it's free they'd better smile! Thanks for the link, but I'm really more concerned with what I have to do to be legal if I pursue this endeavor financially.
     
  4. Tikitak

    Tikitak Junior Member
    Messages: 10

    The place to start is at your county government office. If you call or visit them, they will help you get started with a simple application.

    You will hear terms like sole proprietor, incorporated, DBA (Doing Business As), and many other terms you'll want to know. You will also be required to run an ad in a local newspaper for a few weeks, announcing publicly that you are a real person and will be doing business in a certain industry under a certain name. Don't worry, you will be instructed on what to do. Newspapers do this thing every day and will know exactly how to word it. Check out the legal classifieds section of any newspaper to see examples.

    Its a pretty simple process, and when you are done you will have a federal tax ID number and a name for your business, and you'll feel like a million bucks.You would most likely be a sole proprietor to start, but that is your choice. Incorporation is how you separate your private assets from your business. However becoming incorporated is a bit more costly.
     
  5. MSF

    MSF Junior Member
    Messages: 8

    Thanks! I realize this is more of a general question than a plowing question, but that's what I was looking for mostly.
     
  6. Kenyou

    Kenyou Senior Member
    Messages: 375

    Hi Mike, Welcome to Plow Site. My insurance told me the same thing. Once you start charging for Plowing, then you need all that stuff and Commercial Ins and Liability. If you don't and run someone over, you might as well stick your head between you legs and kiss your azz good by.
    If you are not incorperated etc, they will take everything you own if you don't have the proper insurance. If you are incorperated, then they can only take what the business owns.

    Good Luck
     
  7. JDiepstra

    JDiepstra PlowSite.com Addict
    Messages: 1,780

    The easiest option is to register your DBA (doing business as) name at the country clerks office. This "secures" your companies name as "yours", and makes sure noone else is using it, nor can they use it in the future. Once you have the DBA papers, you can go to a bank and open a business accounts with your, and your businesses, name on it. You can't deposit a check written out to a business into your personal account. Using the DBA it is very easy to complete your taxes, since you, and the business still use the same tax ID number. Now I'm not saying this is what you are doing but I'd be nervous as heck plowing without proper insurance. Your truck will be like the frog in the game "Frogger". So just triple check with your agent that you are covered properly. Good luck.

    Hey and don't forget, if you start claming income, you can write things off, like truck payments, fuel, the plow, tires, cell phone, "work uniforms" like clothes and boots....... I'm not a tax expert of anything so be sure to consult one before going overboard.
     
  8. hydro_37

    hydro_37 PlowSite Veteran
    from iowa
    Messages: 3,790

    Call an attorney.
     
  9. MSF

    MSF Junior Member
    Messages: 8

    Thanks for all the advice! I think I have a pretty good handle on it now. What is the difference between your commercial insurance and general liability as far as what covers what?
     
  10. Premis

    Premis Junior Member
    Messages: 8

    I'm an insurance agent so i can help you out with this.

    DISCLAIMER: My advice is based on the policy of the company I represent (Farm Bureau Financial Services) It may not be the same policy as your current company. Always talk to your agent for the final word, have them put their recommendations in writing, if they are scared to do that, RUN!

    Any business or activity that produces secondary income (not your main income source) can be added to your homeowners Liability policy granted that the business produces over $1,000 a year but less than $100,000 annually. Any business or activity that produces less than $1,000 annually is automatically covered on your existing homeowners liability policy.

    If you plan to plow and plan to add it to your home policy I suggest carrying at least a $500,000 liability limit; an umbrella policy for $1,000,000 would probably be the best.

    as far as your question regarding business entity's, if you are small enough you can just use any name and your social security number for documents, then you will claim this extra income on your personal taxes. If you get much bigger I suggest forming an LLC. forming any kind of corporation will require you to get commercial insurance.

    Hope this helps.
     
  11. MSF

    MSF Junior Member
    Messages: 8

    I have renter's insurance. Is it likely that that has "liability" on it, or would I need to supplement it. Also, if I make less than $1000, as I plan to do this year, will my regualar auto insurance policy cover me if I were to hit something? My agent told me they would cover me if I'm not plowing commercially, but if I'm making some money, would they?
     
  12. Premis

    Premis Junior Member
    Messages: 8

    Again, this is something you need to talk over with YOUR agent.

    At Farm Bureau a renters policy includes liability and at Farm Bureau if you make less than $1,000 per year plowing you would be fully covered under the insurance (I assume) you already have. If you make $1,001 per year you would not be (We would likely give you a 250-300 buffer there, but your company may not).

    It really does you no good to ask me unless you are insured with Farm Bureau, every company will be different. Call your agent, set up a meeting, and talk to him about it. That is why he is there. Have him put it on paper too.
     
  13. MSF

    MSF Junior Member
    Messages: 8

    Thanks for shedding some light on the situation, I feel a little more confident about plowing now. I sure hope State Farm will cover me like Farm Bureau does.
     
  14. Premis

    Premis Junior Member
    Messages: 8

    They might. I've seen them cut corners before.

    If you talk to your agent and he puts in writing that you are covered and then State Farm denies the claim, assuming you acted within the agreement, he is liable. That is why agents carry Errors and Omission insurance.