Just curious. I would like to start a simple landscaping / tree service. Anyone know what is involved in starting that kind of business?
You need to form an entity for your portection. A corporation or LLC would be the most common. Once you get that decided you have to register with the Secretary of State to get an ID number with the State and apply for a Federal Tax Id, as well. These will be very important numbers in getting checking accounts and dealing with employees. You can do your own payroll and make deposits at any Federal Bank, but it is a PITA muach of the time and opens you to some liability for errors. The state dearly loves to change the SUTA rate before the end of the first quarter, which results in a retroactive adjustment for all of the deposits. There are simple packages which can allow you to incorporate and it is not really that hard, but you do have to make sure you make good choices at the start. For example, doing your accounting on the cash basis can be a benefit and you can always change at any time, but if you can never change back to the cash basis from accrual. A singel owner LLC can be handled directly through your personal income tax and a Sub-Chapter S corporation does not pay any corporate tax, but has all of the liability flow to the personal tax filing. The corporation has to file separate taxes and file a K-1 to transfer the tax liability. You need to hold the regular directors meetings for the corporation too. The portections provided by incorporation can be voided if it can be shown that the corporation was not run according to the rules. For many types of business a good liability insurance policy is very important, especially for company owned vehicles or personal vehicles used for company business. The sad statistic is most businesses do not survive the first five years of operation. I have been involved with 4 startups which have survived up to a couple of decades, 2 which developed fatal errors, and 1 purchased operation which could not be saved. I have seen half a dozen or so which never had a chance, a couple who took off, and far too many which grew quickly and then crashed and burned. A good accountant, banker, and insurance agent as advisors is very helpful throughout the life of any business.
Two good references on the subject: http://www.secretary.state.nc.us/corporations/pdf/BusinessCorporation.pdf http://www.secretary.state.nc.us/corporations/pdf/LimitedLiabilityCompany12-13-2013.pdf If these seem too complicated it may be good to consult an attorney in addition to having the other advisers.
The main benefit for some type of legal company entity is the protection of your personal wealth, such as your car, home, future earnings, etc. from liabilty. of course, any loans you seek will almost certainly require a personal guarantee which puts all of this at risk, but you make that decision on a case by case decision instead of others making that decision for you.
Thanks, but I was thinking along the lines of mowing lawns and landscaping on the side to earn a few extra bucks. I would think all of what you just mentioned is overkill.
If you are starting a business you should follow what Wayne stated above. If you are just doing mowing on the side, like teenagers do, then I would not state that you are starting a business. You are actually looking to pickup a few dollars on the side mowing grass. Please correct me if I am wrong....pwoods. Sherry
Only if you don't mind getting sued for all you have and may accumulate later. You need liability insurance if you just cut one yard a week.
yeah, at the very least be insured... freak accidents happen, God forbid you're cutting a lawn and pick up a rock and zing it and it accidentally hits a child in the head or eye and they suffer a very serious injury.. than what? While owning/starting a business always have a plan best you can for the worst happening. Be well prepared.
I agree, Father-In-Law was mowing our lawn and a rock went flying through the living room. All it cost us was a new window but if it hit a child the costs could have gone very high.
The "tree service" aspect was what caught my eye. Cutting a tree is a huge liability magnet even if it is just a limb or two.
Great Advice. Pwoods: Great advice from what sounds like a very knowledgeable bunch. I completely agree with all they have said. It is all about liability these days and people will sue over the smallest thing. A lot to think about.
What Wayne has said is very good general advice, and in a high-liability business, you'd probably want an LLC, and to have some solid liability insurance. Don't go through Legalzoom. Pay a good lawyer who specializes in these things $200 for an hour's advice. It will be possibly the best $200 investment in your new business
