StewartTreeCare
ArboristSite Member
I am thinking of forming an LLC for my business, good idea or no?
Sole Prop. vs. LLC
- Thread starter StewartTreeCare
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lawnmowertech37
Addicted to ArboristSite
its actually a personal preference at what they want to do when it comes to being in business me personally im aiming for the S corp
autobaun70
ArboristSite Member
the main advantage to any type of incorporation, be it LLC, S corp, ect, is seperation of personal & business liability. Any any business, especially a high liability one such as tree work, this lack of seperation could have very negative side effects should something happen. Once your insurance runs out, the next step in the chain would be business assets, and then personal. This puts your home, vehicles, and everything you own under the "fair game" classification should an accident or lawsuit occur. Beyond this, there are other advantages in terms of taxes, ect, but that's a whole different issue, and will vary greatly depending on where you are, and can best be answered by an accountant that specialized in small business.
PA Plumber
Addicted to ArboristSite
Not a tax/business guru and not in the tree care business but...
I have an LLC with S filing status. I like everything about it except I can not get Worker's Comp on myself. Any employees would, just not the managing members of the LLC.
In Pennsylvania, insurance companies hold the decision power to cover Worker's Comp for an LLC. I was able to get it for a few years, but no longer.
If you are incorporated in this state, up until a couple of years ago at least, you couldn't be denied worker's comp.
I have an LLC with S filing status. I like everything about it except I can not get Worker's Comp on myself. Any employees would, just not the managing members of the LLC.
In Pennsylvania, insurance companies hold the decision power to cover Worker's Comp for an LLC. I was able to get it for a few years, but no longer.
If you are incorporated in this state, up until a couple of years ago at least, you couldn't be denied worker's comp.
There is actually no difference with (federal) taxes between the two. The IRS does not recognize an LLC - you are either a sole proprietor, partnership, S-Corp or C-Corp.
If you are deciding between those 2, I can't think of ANY reason why you would not want an LLC.
It costs $75 in Ohio to file and no lawyer needed. I think it is a 2 page application that is pretty straight forward. Obviously each State will be different... I would kina expect NY or Cali to be a 8235 page document that you need legal counsel for - but I have NO idea...
If you are deciding between those 2, I can't think of ANY reason why you would not want an LLC.
It costs $75 in Ohio to file and no lawyer needed. I think it is a 2 page application that is pretty straight forward. Obviously each State will be different... I would kina expect NY or Cali to be a 8235 page document that you need legal counsel for - but I have NO idea...
BlueRidgeMark
Addicted to ArboristSite
Why do you want to do an LLC?
Is it because you "heard that blah blah blah"?
Or is it because you attended a seminar where somebody pushed the LLC and had a sweet one time deal to set you up?
Or is it because you consulted a qualified, reputable lawyer and now have a good understanding of the whys and whats of incorporating?
I'm asking because far too many people do a quickie incorporation with only the vaguest idea of what is involved, and why they should do it, and what the pitfalls are. It's not a cure all, and if you don't know what you are doing, it can be nothing more than a foolish waste of time and money, providing little or no protection of your personal assets.
Get advice from someone qualified, not some anonymous person on the Internet.
And, no, just because somebody has done it himself does NOT mean he knows what he's talking about. If he DID, he would NOT advise you to incorporate, he'd advise you to seek advice from someone who is REALLY qualified.
Hmmm. I'm not sure I made that very clear. Let me try again:
Simply the fact that another business owner advises you to incorporate, and tells you what a great deal it is, proves conclusively that he has no clue what he's talking about. He doesn't know how little he knows, or he'd keep his mouth shut. It's kind of a "fools rush in where wise men fear to tread" thing.
I'm not saying you should NOT incorporate, but I AM saying this is the wrong place to get advice on it.
Is it because you "heard that blah blah blah"?
Or is it because you attended a seminar where somebody pushed the LLC and had a sweet one time deal to set you up?
Or is it because you consulted a qualified, reputable lawyer and now have a good understanding of the whys and whats of incorporating?
I'm asking because far too many people do a quickie incorporation with only the vaguest idea of what is involved, and why they should do it, and what the pitfalls are. It's not a cure all, and if you don't know what you are doing, it can be nothing more than a foolish waste of time and money, providing little or no protection of your personal assets.
Get advice from someone qualified, not some anonymous person on the Internet.
And, no, just because somebody has done it himself does NOT mean he knows what he's talking about. If he DID, he would NOT advise you to incorporate, he'd advise you to seek advice from someone who is REALLY qualified.
Hmmm. I'm not sure I made that very clear. Let me try again:
Simply the fact that another business owner advises you to incorporate, and tells you what a great deal it is, proves conclusively that he has no clue what he's talking about. He doesn't know how little he knows, or he'd keep his mouth shut. It's kind of a "fools rush in where wise men fear to tread" thing.
I'm not saying you should NOT incorporate, but I AM saying this is the wrong place to get advice on it.
PA Plumber
Addicted to ArboristSite
~snip~
Well now, not so sure this is the wrong place for advice.
I do think it is the wrong place if this is the only inquiry/research being made/done.
It seems the OP was just asking for an opinion. We all know there are plenty of those on this site.
I also asked folks what they thought about sole proprietorship vs LLC vs Inc. Not on a forum, but is was a sample group just the same.
During my decision making process, I did consult a financial attorney.
I wasn't trying to force an opinion on anyone. Just giving a tidbit about some personal experience.
Finally, every couple of years I sit down/phone call, with my accountant to review this very subject, to make sure it is still applicable for my situation.
Well now, not so sure this is the wrong place for advice.
I do think it is the wrong place if this is the only inquiry/research being made/done.
It seems the OP was just asking for an opinion. We all know there are plenty of those on this site.
I also asked folks what they thought about sole proprietorship vs LLC vs Inc. Not on a forum, but is was a sample group just the same.
During my decision making process, I did consult a financial attorney.
I wasn't trying to force an opinion on anyone. Just giving a tidbit about some personal experience.
Finally, every couple of years I sit down/phone call, with my accountant to review this very subject, to make sure it is still applicable for my situation.
af7850
ArboristSite Member
This is a very poor gauge of a person's intellect, and a completely non sequitur argument.
To prove my point, if you respond to me it'll prove just how unqualified you are to comment on this thread.
af7850
ArboristSite Member
Generally it is a very good idea to properly form and maintain an LLC business entity, if you are concerned about limiting your personal exposure to business liability, and/or if your financial standing will improve by claiming business profits on a K1 addendum to your personal income tax return.
Just like any other tool, there are tricks to using an LLC properly; fail to do so, and it will give you only a false sense of security. If you are a quick study, get a recently updated book that specifically references the laws of your state. If you're not the read-and-learn type, you had better consult an attorney to learn exactly how to properly set-up and maintain your new corporate veil.
You should also consult your accountant to see what option (LLC, X Corp, etc) will best suit your financial needs.
indiansprings
Firewood Purveyor
the main advantage to any type of incorporation, be it LLC, S corp, ect, is seperation of personal & business liability. Any any business, especially a high liability one such as tree work, this lack of seperation could have very negative side effects should something happen. Once your insurance runs out, the next step in the chain would be business assets, and then personal. This puts your home, vehicles, and everything you own under the "fair game" classification should an accident or lawsuit occur. Beyond this, there are other advantages in terms of taxes, ect, but that's a whole different issue, and will vary greatly depending on where you are, and can best be answered by an accountant that specialized in small business.
Excellent advice! Seek the advice of a CPA or attorney, a CPA usually is cheaper, if you want to protect your personal assests it is the safest route.
Excellent advice! Seek the advice of a CPA or attorney, a CPA usually is cheaper, if you want to protect your personal assests it is the safest route.
Oly's Stump
ArboristSite Operative
For what its worth I guess...My business has been a S-corp for some time now. Both my lawyer and my accountant recommended it.
