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dba or LLC

Discussion in 'Business Fundamentals' started by bigmac1276, Oct 10, 2010.

  1. bigmac1276

    bigmac1276 Member
    Messages: 57

    I have been plowing snow for sometime now and I have gone out pretty much on my own and I am wondering what would be the best interest for me a dba or llc? I have 7-10 commercial properties that I plow, I already have commercial/liability insurance for $2million( for subbing) but I bought another truck and getting ready to buy a bigger salt spreader. Some of the properties I bid this year I might make closer to the $10,000 figure. I have been averaging between $3,500 and $7,500 but everybody knows plow **** aint cheap. I would like to write off some of my loss. What do you guys think?
  2. Rc2505

    Rc2505 PlowSite.com Addict
    Messages: 1,245

    DBA is the easiest and cheapest way to go if your just looking to write off the costs of equipment. However, LLC limits the liability of you, and your company. So say you run into a building, and cause it to fall and kill someone, then you get sued. With an LLC they can only collect the limits of your insurance, and can't go back on you personally, and try to take your house, car, truck, future earnings, and so forth. With a DBA they can.
  3. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Very well stated... I might add, talk to your lawyer and CPA about the pros and cons of incorporating and what entity to form......
  4. deicepro

    deicepro PlowSite.com Addict
    Messages: 1,124

    LLC is the smarter way to go, only cost me $180 to do it myself
  5. ff610

    ff610 Senior Member
    Messages: 320

    LLC at a minimum. You should have been writing off your expenses as a non incorporated sub anyways. That is if you've been claiming the income.
  6. swtiih

    swtiih PlowSite.com Addict
    Messages: 1,179

    Agree with all the previous posts. If you are plowing anything then you can't afford to be sued personally. LLC is a must. Once you go to an LLC you will need an accountant. Start making calls now because during tax season they get very busy.
  7. EGLC

    EGLC PlowSite.com Addict
    Messages: 1,733

    Make an LLC then under that LLC make a dba.
  8. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

    An LLC doesn't limit the liability of your company, only your liability.

    It is possible to "pierce" an LLC. The easiest ways to avoid your LLC being broken and liability coming back to you are: never accepting checks written to you and not the LLC, never having equipment or contracts in your name, any time you sign something sign as "your name, member"
  9. ff610

    ff610 Senior Member
    Messages: 320

    Whats the advantage of this?
  10. mc1

    mc1 Senior Member
    Messages: 171

    dba is fine for just you. with any employees you want to limit exposure, talk to a lawyer but i beilieve a s corp is the best option
  11. bigmac1276

    bigmac1276 Member
    Messages: 57

    Thanks guys for the input.
  12. Flipper

    Flipper PlowSite.com Addict
    from CT
    Messages: 1,180

    Anyone who think an LLC limits them in a fatality etc is being ignorant. Proper insurance is the only thing that will protect you. Not contracts lingo, not how the business is formed. There is an owner of a trucking company in CT that is bankrupt and now in jail because he did not properly insure his company and thought the LLC would keep hime safe. They had an bad accident and he lost his business, then his personal property, including stuff in his wife's name and finally his freedom because he was not insured.
  13. EGLC

    EGLC PlowSite.com Addict
    Messages: 1,733

    that's complete bs that they took his wife's stuff. he should have counter sued.
  14. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

    Not sure what EGLC was going for, but most if not all states require that LLC's end their official name with LLC or Limited Liability Company/Corporation. If you file a dba for your LLC you can operate under a name without LLC... at the end of the name.

    I'm aware of no substantive advantage to a dba other than that.
  15. Mdwstsnow512

    Mdwstsnow512 Senior Member
    Messages: 168

    i always thought that a DBA was purely doing business as a different name, and that is all. legally and financially no real advantage. but i could be wrong
  16. ff610

    ff610 Senior Member
    Messages: 320

    That's how I understand it.......
  17. Tubby's Snow Plowing

    Tubby's Snow Plowing Senior Member
    Messages: 199

    A DBA is "doing business as". It's a ficticious name given to individuals in business for themselves (called a sole proprietorship) or to corporations and LLCs that operate under a different name than the company name. An individual, corporation (S corp or C corp), or LLC can have a DBA.

    An example would be Midwest Maintenance Enterprises, LLC with DBAs of Midwest Landscaping and/or Midwest Snow Plowing.

    You can have multiple DBA for the same company. The company is Midwest Maintenance Enterprises, LLC but the trade name (name which you advertise and use in business matters with the public) are the DBAs. The DBA is simply how your company is known. There is no financial or legal incentive to use a DBA, it's just a name, usually a shorter version of the actual company name for brevity or clarity. Also the fact that your personal name is in the DBA or company name doesn't mean a darn thing.

    Being incorporated (an LLC is a form of incorporation) protects the assets of the proprietor(s) from business related liability and debts. If your company bought a truck and plow on a loan and defaults, the creditor cannot touch your personal assets to satisfy the company's debts. It will not protect you from actions you personally do, even under the guise of the business, such as a vehicle accident where there is injury or death. A corporation isn't for that and won't offer protection.

    What the previous poster is referring to is "piercing the corporate veil" as it's known. Mixing personal money with company money is a sure way to do that. Also signing contracts and agreements with your name AND title might help a bit, but aren't really much of an issue if the contract is naming the company and you are signing on behalf of the company as an agent of power. Also if you personally guarantee any loan or line of credit, that means your personal assets can be used to satisfy such debt.
  18. Raymond S.

    Raymond S. Senior Member
    Messages: 513

    My lawyer put it simply to me and my accountant confirmed. Any form of incorporation (S-corp, LLC, etc) will only protect you from employee negligence, not personal negligence. If you are a solo operation you may as well stick to a DBA because you are just a sole proprietor doing business as ......(your business name)....All the expenses and revenue passes through to your personal statement at tax time.
    The advice I got was to take the extra money I would have spent on forming and LLC and upgrade from my $2million liability policy to $5million. That would go further in protecting me than any form of incorporation.
  19. Tubby's Snow Plowing

    Tubby's Snow Plowing Senior Member
    Messages: 199

    That is incorrect. You have been given wrong information.

    You are an employee of the LLC.

    An LLC is a legal entity separate from its owners, even if single owner.

    For tax purposes only the tax liability is passed through the LLC to its owners.

    This is the same as an S corporation. The corporation or LLC doesn't by default pay taxes, its owners do on behalf of the corporation or LLC for the sole reason of simplifying tax return paperwork. That is NOT a sole proprietorship.

    Taxes and legal protection are NOT the same.

    The IRS, federal, and state law all address this as above. If you choose to ignore fact, that's your prerogative.
  20. paponte

    paponte Senior Member
    Messages: 717

    If you own a home I would at minimum consider an LLC. if doing snow removal.