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LLC Questions!

Discussion in 'Business Fundamentals' started by born2farm, Jan 3, 2011.

  1. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    With it being a new year and I am finally 18, I am ready to grow my plowing into a real company. I am filing for my LLC, EIN, and vendors license but I do have some questions before I send anything in. The filing itself is pretty straight forward but I dont want to end up hurting myself more then I help. Heres my questions.

    1) What is an LLC with only one member required to do for Self Employment Tax? Is this different then my entity's income tax? I plan on filing taxes seperate from my personal return so what am I required to do through out the year?

    2) Should I be operating as an S-Corp under an LLC? I will be the sole member of the LLC operating like a sole propriatoryship, just want the legal protection of my personal assets.

    3) What are some common over looked things when taking a big step to an LLC. Maybe some things you guys didnt know about when you started and then got slamed with them.

    I am trying to find a general outline of what the Agent of the LLC is responsible for. I know that ill have to do self employment tax 4 times a year and turn sales tax in, but what else is there?

    By the way I do have a meeting set up with my tax guy/attorney, I would just like some answers before I go in there so I dont look like a complete idiot. Plus the faster I am in and out the cheaper it will be.

    Thanks in advance guys.
  2. charliesoutdoor

    charliesoutdoor Junior Member
    Messages: 5

  3. shovelracer

    shovelracer Senior Member
    Messages: 525

    Without a doubt your safest bet is to have your meeting. That is why you are paying them. There should be a flat fee for filing everything for you. Maybe around $150. LLC rules vary by state, so my advice is of little good. Yes you are required to pay income tax and self employment tax. The only thing I can think of when we changed to LLC is that we now use our EIN instead of social and we pay estimated tax quarterly instead of yearly.
  4. clark lawn

    clark lawn PlowSite.com Addict
    from NE ohio
    Messages: 1,233

    when i checked into it my attorney told me that going LLC for a solo op was a waste of money. if you have employees that are going to be driving your trucks and/or running equipment then it MAY be worth it. if you are solo it will not protect you at all from a lawsuit.
  5. suzuki0702

    suzuki0702 Senior Member
    Messages: 649

    ditto.. just throwing money away. more tax forms, more accounting, higher insurance, workers comp, unemployment.blah blah blah list goes on and on
  6. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    Well more then likely I will be hiring a equipment operator to run a skid loader or truck for me next year so an LLC looks like the way to go.
  7. deere615

    deere615 2000 Club Member
    Messages: 2,919

    I went LLC it is better as in if you grow and liability is limited to business assets not personal. I had an attorney do it all it is so much easier you just give them so info and they do everything else. JMO
  8. ABsnow

    ABsnow Member
    Messages: 32

    I recently did an Ohio LLC myself, I am not an expert but I'll offer my knowledge.

    1) All my my income taxes are filed once a year with my federal return. I have a full time job other than my business, but my accountant files the self-employment tax with my yearly return. My sales tax get paid twice a year, use the Ohio Gateway Online, makes things easy.

    2) The LLC is your protection from loss of personal assets, to an extent. An S-Corp is a different type of business structure. Talk to your lawyer about protection.

    3) LLC's are simple, there isn't any more surprises with an LLC than there is with any other business structure. It's literally a couple forms to file, good record keeping, an honest accountant, and your ability to run the business.

    It is a rather simple process and once you get the initial paperwork filed, it is nothing more than making money and paying taxes. Make sure to keep a good relationship with your insurance agent also, that is where most of your protection comes from, not the state. As I said, I am not an expert but this is how my business operates, hopefully I'm not too far off. Good luck!
  9. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Your going about it the right way... no matter what the lawyer and cpa charge you its some of the best money you'll spend. While your at it have your attorny draw up a snow removal contract.
  10. kc2006

    kc2006 Senior Member
    Messages: 984

    LLC is the way to go, if you decide to grow it will be better for you, and it does protect your personal assets. There's certain things a corp is good for. In a corp your pretty much totally seperate from the business, say you rack up a bunch of bills and close the doors, its on the business name not yours. You do the same with an LLC and it's on you and the business. But like some have said say you get sued, they can take all they want from the business but you'll still have your house and all your personal stuff. You can even get around the truck by owning your truck and leasing it to your company so in the event of something your safe there too. Really works well with if you drive the truck personally, I know the big construction companies that do paving do this in opposite. They own the trucks and lease them to the employees during off hours so if the employees get in a wreck and kill someone it's not a company vehicle. Smart.

    There's really no surprises. You have it laid out right, I did mine right when I turned 18, I had my accountant help with the paper work, he charged me like 25 bucks to fill all the papers out, put post it notes on each for where to send them and I was on my way. File for your LLC, your service vendors lic, and your EIN. I think its 150, 25 or 50, and ein is free through the IRS. When you file your taxes it's pretty straight forward, I bring in an expense report, plus a sales list, the accountant enters it all and he'll tell you what you owe. You don't have to pay in the 4 installments, but you do get a discount if you do, because the gov doesn't have to wait longer for the money. And on your sales tax you'll either be every 6 months or monthly depending on the amount of sales you do.
  11. deere615

    deere615 2000 Club Member
    Messages: 2,919

    yes, all though I think(at least here) the 4 installments is considered what you should do and there is a penalty if you dont.
  12. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    Thanks for the info guys. I will see what the CPA says at the meeting.

    One more broad question for you guys with employees. I am figuring up a budget but was looking for a rough figure on how much an employee costs you. Not counting wages. Just in insurance etc.
  13. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    I figured out a rough figure of 1.5 times their hourly wages... this takes into account my side of payroll taxes, works comp, f**k off time that I don't get production out of them, and s**t they break)... employees are a pita but you have to have them to grow your biz... good luck
  14. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    If you are counting that you better make it 2x the wage. :realmad:
  15. jomama45

    jomama45 PlowSite.com Addict
    Messages: 1,190

    Are you kidding????? I don't think your answer could have been any better. Thumbs Up

    I agree with the 1.5 factor, but it is subjective and certainly approximate. If you are in engaged in work that has a high WC rate, your employees work a lot of overtime, they get long periods of unemployment, etc..... the actual rate can be substantially higher. You'll also be subjected to fairly high WC rates for the first 3 or so years, until you have a track record of claims and an experience mod is set for your company.

    As for the LLC, there's no better time than now to establish it IMO. I procrastinated on mine, and waited 10 years before going through it. It took fairly serious event to finally open my eyes to the liability I was exposing myself to. When your established and then form an LLC, your going to be throwing away alot of paper, IE: unused checks, pre-printed invoices, envelopes, business cards, etc.... The minor $10 a year renewal fee for an LLC is well worth it in grand scheme of things.

    One more thing: Make sure to build a good working relationship these three individuals:
    - Lawyer. (Hopefully you rarely need them, but you need to have a back-up for worst case scenarios)
    - Accountant (they don't necessarily have to be a CPA for a small business, but at least need to be a certified tax professional that specializes in small business.)
    - Insurance broker. (A good broker is on YOUR side and will do their best to find you the best provider when it comes to WC coverage, as that is typically the vast majority of your insurance costs once you start getting large payrolls.)

    Good luck, your certainly getting off on the right foot. Thumbs Up
  16. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    And who said we don't give good advice on this forum?....... Thumbs Up
  17. born2farm

    born2farm 2000 Club Member
    Messages: 2,310

    Hey guys thanks a ton for the responses. I am glad that there is still some people willing to help out a young guy. I understand all these numbers are approximate but they will certainly help with budgeting. Thanks again guys for all of the input
  18. KM81

    KM81 Member
    Messages: 47

    I would suggest a C Corp. Here is why:

    1. Cheaper than an LLC (LLC: $1200-1700 C Corp: $975)

    2. Tax Purposes: Snowplowing/Landscaping is basically a cash business for the most part. You are less likely to get audited being a C Corp. Also you can estimate your taxes in a more suitable fashion with exemptions and such than being an LLC

    3. C Corp: Get sued. Close business. Walk away debt free
    LLC: Get sued. Close business. Still owe money personally
  19. jomama45

    jomama45 PlowSite.com Addict
    Messages: 1,190

    Care to elaborate on that part?
  20. KM81

    KM81 Member
    Messages: 47

    I just went through all of this 2 months ago. My attorney quoted me $1300 for an LLC and $975 for a C Corp.