Type of buisness

JCONN

I was going to make this a poll but I stink at using computers. What type of buisness do most of you guys have, by this I mean is it a DBA, corporation or LLC. The reason I ask is that talking to alot of people everyone is talking about changing to corporations for different reasons but no one really gives me a good reason why. Its all the same answeres,to releave reasponsibilty, and to protect their personal belongings, which can be done with proper insurance. When I ask my accoutant or lawyer about changing from a DBA they are all about it because its more work and money for them, but again I get the same answeres why from them.
The only place I have gotten any reasonable response is froma place called SCORE. This is a free web services run by former CEO's, presidents, accountants, lawyers, you name it that run small and large buisnesses around the country. The few I have been emailing have all said that for a small buisness staying a DBA is much simplier then other routes, and again proper insurance is important.
I understand that some of you have large buisnesses with much larger equipment and more employes and may require to be a corporation for various reasons like having share holders and such. I am mainly directing this to people with smaller buisnesses but any information can be used as good information.

And once again I have to say that I am very happy I have found this site, Ihave learned so much. THANK YOU

Ekka

Terminolgy varies around countries.

This should answer your question.

Legalfilings.com, Incorporate, Incorporation, 501c3, Tax Exempt, Non Profit

A Pty Ltd here or LLC there is a legal entity, able to buy, borrow, sell and trade.

That means if the company for instance suffers a loss unless there's a directors or presidents guarantee personal assets cannot be seized unless you are convicted of insolvent trading.

It's a smart way to separate your business from personal assets. Insurance doesn't cover everything, especially losses.

In a real live case a guy I know who had a company .... the OHS people fined the company $25K, so he shut the company down and walked away. If that was DBA he would have had to pay it and they could take assets.

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Therrin

JCONN,

I know exactly what you mean. Small business, not a bigger operation, and trying to figure all this out.

I figure after a year of running the business as DBA I'll have the ropes down to jump to the S-corp level, for the exact reasons that you and Ekka already stated.

S-corp tax structure is more complex. I'm meeting with a tax guy soon to chat all this over and get some answers about it, since I don't understand all of it. Might pick up a book at Barnes & Noble too, I noticed they've got alot of stuff on this topic.

From what I understand, S-corp has a stronger backed level of seperation and different tax structure than the LLC.
Study up on the legal and tax values of your different choices, and it should become more clear which of them for you to pick after you understand exactly what each one is.

JCONN

THERRIN you are correct about the S-CORP but when I spoke with one lawyer and accountant they said that was the way to go, but two others I have spoke with said that LLC was the way for some one like me to go. The benefits of a LLC were that alot less strict with rules and less papper work. It is supposedly easier to run for guys like me and I suppose most of the rest of us. I am good at what I do work wise in the field but hate the paper part of it. I know that is what you pay accountants and lawyers for to check over things but I hate trusting these people with my lively hood and not knowing 100% whats going on.
I only posted this to see what you guys have learned over the years. To see what real people in the industry have learned and not some expensive bull crap that no one understands from lawyers.
Ekka thanks for link when I get home from work today I will check it out.

shaggs

Jconn, pty/ltd for me, and I think most aussie guys??

treevet

Profitable one (just being a wise ass)

Streyken

Still sole proprietor. Generally, here it is wise to think about incorporating at about 60-70K, but that can depend on expenditures. I like to buy lots of things for the tree and online businesses, so I have lots of legal write offs; that is why I'm still sole proprietor. My accountant and lawyer both said that going incorporated doesn't necessarily limit personal liability, depending on circumstance, and that there is lots of case law to prove this. So I do what is tax wise, but talk to an accountant and a lawyer.

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Trimmin' bush and caring for flowers is good 'n' all...
but sometimes ya gotta let the big wood fly and pound the garden.

treevet

I agree with you Streyken, I was Inc for about 30 years and went back to SP for some of what you said and also because my accountant thought it was best for me. Accountant is the key word here. Probably most important person in my life besides family.

Streyken

Yup. He tells me when to hold em' and when to...stick it! Saved me from myself more than a few times.

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Trimmin' bush and caring for flowers is good 'n' all...
but sometimes ya gotta let the big wood fly and pound the garden.

treevet

Yeah man, used to be scared to death of the A word (audit). Not any more though not encouraging one either. Luckily for me they ( husband and wife team) have offices in home and a huge yard full of big trees. We trade off so to speak. Don t know if I could afford it otherwise and they sure don t charge as much as they are worth to me.

William Greene

that's what i do too,i'm lucky my dad is a lawyer and i've learned nothin' like a one man band!

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JCONN

STREYKEN and TREEVET I agree with both of you, as much as I hate to pay sometimes for accountant services I would rather pay a little up front then the charges and fines that the tax man could come up with if not done right.

Arizona Kenn

If there is a claim against you, say a guy cut his head off only 1/2 way, and he lives but will require major life support for the next 50 years, you will be the one liable towards his upkeep till he dies. Lots of legal stuff, hospitals and LOTS of money. If you don't have enough insurance to cover the next 50 years of the 1/2 headed man, YOU will be the one to pony up. You are the business and the business is you, house, cars, tools, 2nd and 3rd born will be looked at as assets that can be used to pay the guy with 1/2 a head (I would suggest a partnership and do the freak show thing.) And by the way, $1,000,000 is not a lot of money these days so if you think insurance will save you, you'll hate those premium increases at the next renewal, if you can even get insurance after the Frankenstein claim.
If you're a corporation, the only assets attachable are the assets of the corporation, so the 2nd and 3rd born are safe from court mandated surrender. Most taxi companies will incorporate each individual taxi, 100 cabs on the street, 100 corporations; only the assets of that one car are at risk if someone sues.
Of course this is coming from a guy that didn't have renters insurance and the house burnt down (we all have learned things the hard way.) By the way, If you rent, get renters insurance, it's cheep.

Streyken

Arizona Kenn, I suspect it's very different from area to area. Here, being incorporated doesn't necessarily protect you or your assets; my accountant was the one who brought this to my attention and my lawyer confirmed it, otherwise I would be incorporated regardless of the cost. Plus, here it is mandatory to carry Workers' Compensation (WorkSafeBC.com - Home) I'm currently paying just over 10% on gross wages. Medical is basically free here, and is also mandatory to pay into.

WCB is totally separate from liability insurance. I carry 5mil liability in case I hit a house or injure an innocent bystander. This is also why it's wise to have your company's Health and Safety Program and Operational Procedures Manual in order.

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Trimmin' bush and caring for flowers is good 'n' all...
but sometimes ya gotta let the big wood fly and pound the garden.

treeseer

Sole Proprietor; flying low. Looked at corp and llc but did not make sense due to small size. Maybe later. Maybe not.

I had someone look at my e&o and found enough loopholes to incline me to drop it. I know quality consultants who work without it. Their opinion is, if you are tied to an insurance company, you have made yourself a much more likely target for suit. I'd rather stay small.

Yes this is very region-dependent--we have no OHS, and not as litigious as on the west coast (of the us). There, I hear that you want to be protected against being Californicated.

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Guy Meilleur | Forensic Arborist | Better Tree Care