SouthSoundTree
Treehouser
I am looking to change from sole prop to incorporated and started reading a Willie recommended book. Got me thinking.
who has a business attorney? Who's incorporated?
- Thread starter SouthSoundTree
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NickfromWI
King of Splices
Right now I'm going under the "I ain't got nothing so go ahead and sue" mentality.
Not sure when that will change.
Why go LLC?
love
nick
Not sure when that will change.
Why go LLC?
love
nick
SouthSoundTree
Treehouser
- Thread Starter Thread Starter
- #3
Starting to get something to accumulate things to be sued for...mortgaged house/property that we've paid on for 4.5 years, other possessions, wife's car... and not being on every job anymore.
Tucker943
Bamboo Plantation Owner
If you have nothing to lose, you are golden. Somewhat. It would take an absolutely starving lawyer to take a case to come after you. But they exist. I hate lawyers and refuse to work for them.
SouthSoundTree
Treehouser
- Thread Starter Thread Starter
- #5
A lot of lawyers suck, but for personal protection, not using one would be cutting off your nose to spite your face.
From the little bit that I read, I gathered that being a sole prop is harder to sell the business, and in the event of an untimely death (which I'm hoping to avoid), its harder to deal with as well.
I'm looking to protect myself and my wife.
If something bad were to happen, it would suck to lose the business assets, but not the end of the world, as my equipment wouldn't add up to a ton of dollars, even though its pretty dependable, as the trucks, chipper, stumper, trailers are older.
My bookkeeper told me that personally owning the equipment and renting to the corporation would be an audit trigger, so even though the equipment might not be protected, it might not be worth the risk of the hassles/ expense of an audit.
Peace of mind is a good thing, too.
Hopefully, as time goes on, I"ll be farther from having nothing. As well, my dad recently died, so there is some estate stuff to protect.
From the little bit that I read, I gathered that being a sole prop is harder to sell the business, and in the event of an untimely death (which I'm hoping to avoid), its harder to deal with as well.
I'm looking to protect myself and my wife.
If something bad were to happen, it would suck to lose the business assets, but not the end of the world, as my equipment wouldn't add up to a ton of dollars, even though its pretty dependable, as the trucks, chipper, stumper, trailers are older.
My bookkeeper told me that personally owning the equipment and renting to the corporation would be an audit trigger, so even though the equipment might not be protected, it might not be worth the risk of the hassles/ expense of an audit.
Peace of mind is a good thing, too.
Hopefully, as time goes on, I"ll be farther from having nothing. As well, my dad recently died, so there is some estate stuff to protect.
sotc
Dormant hero!!
FWIW, 6.5 years without an IRS audit. Might be worth asking a few more bookkeepers the same question. Just like tree people, some really know the game, some just do the minimum
CurSedVoyce
California Hillbilly
Damn straight. Carl is someone to be reckoned with in the cranial works department.
lumberjack
Young man on the go
LOL.
No lawyer here, although we used one to draw up the LLC back in the day.
No lawyer here, although we used one to draw up the LLC back in the day.
emr
Cheesehead Treehouser
Same here. Hired a lawyer to help with LLC formation and draw up an operating agreement. It might make sense to do that. I can see how your wife might not like that and things might be good now, but who know what the future will bring.
I also feel that having LLC after our names shows that we are a "real" tree company. It makes us look more professional to our customers.
I also feel that having LLC after our names shows that we are a "real" tree company. It makes us look more professional to our customers.
tophopper
The resident asshole
I never used a lawyer when I converted to LLC. Just filed the appropriate paperwork and paid the fee.
emr
Cheesehead Treehouser
Actually the formation of the LLC was extremely easy and pretty cheap. Our lawyer was only involved with the operating agreement which happened at the same time that we started the LLC.
SouthSoundTree
Treehouser
- Thread Starter Thread Starter
- #14
My bookkeeper works at a company headed by a CPA. The actual incorporation will run around $250 through them. I might be able to do it myself. I don't know. She's sending me a questionaire in the mail, which will have the things that will relate to bylaws and such. I'll find out more when I have it. I may just be able to do it myself.
The attorney part of the question was in regards to liability questions such as cabling and bracing situations, or consultations, and resulting liability through omissions or errors.
The attorney part of the question was in regards to liability questions such as cabling and bracing situations, or consultations, and resulting liability through omissions or errors.
emr
Cheesehead Treehouser
We have professional insurance to cover us in those instances. Lawyer costs included.
SouthSoundTree
Treehouser
- Thread Starter Thread Starter
- #16
Through what insurance company?
emr
Cheesehead Treehouser
West Bend Mutual.
bonner1040
Nick from Ohio
Legalzoom.com You can form an LLC all by yourself. THe beauty of the LLC is the company is the most you can lose, to litigation or credit default. They cant take your families assets.
emr
Cheesehead Treehouser
That's not accurate. One thing that you will find is that most banks still require a personal guarantee which means you can loose your personal money and house and whatever else you have. We had to give a personal guarantee on our loans and according to several people we have talked to, that never changes for small business owners. If you own a company, you literally have your entire life invested in that. Maybe that changes with different designations but I have heard that's true from owners of both LLC 's and Inc's.
Tucker943
Bamboo Plantation Owner
They often want a guarantor on loans for your corporation. Not always. But initially, they probably will. The glory days of borrowing are on hold.
JoshINtrees
TreeHouser
With an Inc. you're basically creating another person so as long as you aren't acting criminally all they can do is clean out that person, not you.
Tucker943
Bamboo Plantation Owner
You are creating an entity.
emr
Cheesehead Treehouser
From what I understand, that's the same with LLC's too. However being sued and going bad on debt are two different things. I know an owner of an Inc who still has to personally guarantee his loans, and he had been in business for over 20 years. Being a LLC gives you some legal protection and some tax benefits. Being an Inc might give you more legal protection but gets more complicated on the tax end.
SkwerI
Treehouser
Every year when I do my taxes, there are several forms that I don't need to mess with since I'm a sole proprietor instead of an LLC. I realize that I'm in the minority here since I have no dependents but hopefully none of you mistakenly believe that forming an LLC is cheaper or easier than staying a sole proprietor. You may gain protection from a possible lawsuit but that protection is not free. I'm just dismayed how everyone acts like forming an LLC is the obvious and easiest path. My old drunk tree buddy got a hair up his ass 3 years ago and formed an LLC 'trying to be legit' and now he has all sorts of complications. Most are due to his own mistakes but forming an LLC created an entire additional multiple level set of problems.
So if you're not living in fear of the lawsuit bogeyman and aren't supporting a half dozen other people then you may want to think twice before complicating matters forming an LLC. Your taxes will be higher and more complicated, you will have several more reporting obligations to various government agencies and just when you think you got it all covered you receive yet another 'requirement' notice in the mail to complicate your life.
So if you're not living in fear of the lawsuit bogeyman and aren't supporting a half dozen other people then you may want to think twice before complicating matters forming an LLC. Your taxes will be higher and more complicated, you will have several more reporting obligations to various government agencies and just when you think you got it all covered you receive yet another 'requirement' notice in the mail to complicate your life.
Tucker943
Bamboo Plantation Owner
Using the corporate shield may keep you from losing your home. You are still in a huge load of crap and facing big problems if you end up with a judgement against you. You are still have to pay that judgement, and that in itself can cost enough that you will end up without your home.
As far as borrowing goes. YOU are going to have to be the guarantor on your loans for awhile after forming the corporation. So again, its not as simple as forming an entity and getting to screw the banks free and easy if you need to.
As far as borrowing goes. YOU are going to have to be the guarantor on your loans for awhile after forming the corporation. So again, its not as simple as forming an entity and getting to screw the banks free and easy if you need to.
