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DBA, Corp, or LLC?

Discussion in 'Business Fundamentals' started by snyps, Jan 4, 2007.

  1. snyps

    snyps Senior Member
    Messages: 101

    So what do you guys use DBA, Corperation, or LLC?

    I am thinking to start with a DBA and go to a LLC down the road? I will have under $20,000 in revenue next year with it. I will be doing Sealcoating, and plowing. Also I want my rental properties and business expenses like Truck, Insurance, Maintaince and fuel costs so I can seperate it from my other income with my full time job.

    What do you think?
  2. Oshkosh

    Oshkosh PlowSite.com Addict
    Messages: 1,655

    Talk to an accountant.

    Get a good accountant and talk with him....
  3. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    it's simple, it's cheap and it's much easier to deal with than the corp
    the idea of the LLC is that you get the protections of the corp, but the income statements flow thru like a sole proprietorship.
    Makes taxes much easier.
    You have to do everything thru the business though, you can't mix them with your personal stuff or you lose the liability protection

    as someone said, see your accountant.
    and I've had a LLC since day 1, and I don't do much more than 20k a year yet (07 is going to be huge,purplebou , it better be:rolleyes:
  4. Grn Mtn

    Grn Mtn PlowSite.com Addict
    Messages: 1,644

    There were more tax advantages and better liability with a "S" Type corporation.
  5. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    there are also more costs. (seperate tax return, Board of directors, etc)

    The one big tax advantage of a corporation is you can pay yourself dividends (taxed at a lowe rate) after paying yourself a salary.
    On an LLC/SP, everything rolls thru as income. (15, 28, 35% rate)

    you still have to pay yourself quite a salary. Paying yourself all or a lot in dividends brings up the hackles of the taxman when it's obvious you are a salaried person.

    Advantages and disadvantages to both.
  6. Grn Mtn

    Grn Mtn PlowSite.com Addict
    Messages: 1,644

    The accountant I spoke with did not mention needing a board of directors, the "s" is short for small or something like that. He recommended it to me because of the house and kids. If the Corp gets sued they can't take the house like with my DBA.
  7. bigjeeping

    bigjeeping Senior Member
    Messages: 678

    Like LoneCowboy said: a sole member LLC is taxed like a sole proprietorship, which means you avoid double taxation! I would choose this route, it's pretty simple to set up and maintain .
  8. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    DBA, Doing Business As - your business name here
    Joe plower is doing business as "Joe's plowing".
    A dba is not a business classification.
    Joe will still need a LLC or a Corp license/registration..

    LLC or a Corp will separate your personal assets from your business assets.
    The LLC form will ask for your business name, DBA.

    I'm an L.L.C. A LLC would be the way to go for a business like we are running.
  9. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    $20k a year doing seal coat and plowing I would only worry about having insurance and just go with a DBA and a Sole Proprietor.

    You mix one "real job" check to buy a bucket of seal coat and the hole thing blows up, accounting wise of course. You stay SP and that would not be a big deal.

    5 years, just under $100k and 1 full time employee and I'm a Sole Proprietor. I "earn" what ever is left over after all the expensies are taken away from the gross income.
  10. plowman350

    plowman350 Senior Member
    Messages: 125

    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.
  11. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    OOps... next
    Last edited: Feb 13, 2007
  12. BOSS550

    BOSS550 Senior Member
    Messages: 212

    I'm a DBA. The main reason was when I started I was short on cash like most guys. The main thing my accountant told me about deciding to go with a DBA,LLC, S Corp etcc. was that in their experience if someone is going to sue you for something in the end it doesn't matter what your business setup is. If the other guy has a good lawyer and wants your stuff bad enough they will get it! It has to do with the different ways and multiple ways a lawsuit can be filed. I have a customer who owns several (15 + ) LARGE businesses and I asked him the same question one time and he gave me the same answer my accountant gave me. Please don't take my word on it tho. Check it out for yourself and ask some accountants and lawyers opinions. I plan to to change from a DBA to something else in the future because there are some advantages posted by others. Good luck!
  13. corey1977

    corey1977 Member
    from maine
    Messages: 50

    dba,corp of llc?

    it dont matter what you do dba corp or llc if the people suing want your business bad thay will get with a good lawyer!:gunsfiring:
  14. mullis56

    mullis56 Senior Member
    from Indiana
    Messages: 824


    We are an S-Corp, and have a couple of DBA's, for the couple of businesses we have. Can't touch anything that is ours personally!
  15. GL&M

    GL&M Senior Member
    from PA
    Messages: 223

    That's exactly what my accountant told me on Friday when I filed my taxes. I asked about the LLC for liability and that was the answer I got.
  16. Bry@n

    Bry@n Senior Member
    Messages: 159

    Guys, That is a lot of bull.

    If you keep your business cash away from your personal cash, you will not get personally sued. My point in a nut shell is this; if you run the LLC or S corp as a DBA, then you can get sued. You need to have a seperate business accounts. Use all business funds for business purchases etc... Even if you have to put the cash in the business account, it better to wash it through the Co. account and pay the bills then right out of your own personal account.

    No using the business funds for house stuff either...
  17. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    Unless you have employees don't worry about it. Your sig says you have one truck, and if your the driver then it wont make a difference. If you have a LLC or a Corperation they can sue you anyways because your the driver and the only thing they can sue you for anyways is negligence! So despite what your business is registered as you can still be sued personally if your the driver. Go with a DBA in that case.
  18. cjasonbr

    cjasonbr Senior Member
    from Mass
    Messages: 635

    I could sue you (personally) right now for saying that. I could sue you for looking at me wrong. I could sue you because you cut me off in traffic. I could sue you because you cut me in line at McDonalds. Now tell me why i couldn't sue you personally for being inderectly responsible for the death of a little girl?

    If that was my girl i'd sue you personally for sure. You were negligent by not checking the area first. A reasonable person would figure that something may be hidden in the grass that could be run over. And a reasonable person should take measures to minimize possible risk, i.e. by first surveying the area. Basically you were negligent by not taking proper care.

    Dont get me wrong, i'd sue the business also, but you certainly wouldn't be spared from personal litigation because the last 3 letters of your business are "LLC"....

    If your Atty told you that maybe you should find another friend :nod: