New Landscaping Business

[Rekon]

Hello Stashers!

My father-in-law has a small landscaping business.  His route is enough to get by.  However, he brings in more $$ through side projects/contracting work.  He is REALLY good at what he does but he is not licensed.  He struggles to get new accounts because a lot of properties require it.  I was thinking of helping him start a company and make it legit by getting licensed, bonded, etc.  I would help him work when i'm not working at my day job.  I would also help with marketing, accounting, invoicing etc.   

I believe this business has a lot of potential to grow and eventually could bring us both some extra coin $$$!  Does anyone have any experience starting up a landscaping or contacting business?  I would love to hear your stories and recommendations on what made you succeed and what you would have done differently.  All advice is much appreciated!

Thanks in advance!

[Trudie]

I don't have experience, but have thought about the same.  I think you should check with the requirements of your state, not only for licensing purposes but also check with your state department of Ag to see if you have to meet additional requirements to deal with nursery stock.

[Thegoblinchief]

Depends on your state, but the paperwork to set up an LLC is ridiculously easy and usually quite cheap. Once you have that, then you can get your federal EIN, and pull quotes for insurance.

 The only thing prohibitively expensive would be getting certified for any pesticide work.

[Rekon]

Thanks!! I did get some more information from the Contractors State License Board in California. 

Basically, they require to pass a test and pay $350 for the application/license.  Also, they require $2,500 in reserves.

Regarding forming a company, if i'm not mistaking, an LLC must pay a minimum of $800/yr in CA tax.  That's a little steep!  But I think an LLC is the best way to go because I do want to protect my assets.  Thoughts? 

[Rekon]

Any contractors out there willing to give some startup advice? 

[Trudie]

I cannot comment on the LLC requirements for your state, including taxes.  Legal zoom, however, is a relatively inexpensive way to set up an LLC and file the necessary paperwork in your state.  If you're not comfortable with the DIY route check to see if there's a law firm (usually with a corporate paralegal) who can assist you.

Usually the Secretary of State's office will have some good information on their website about the different organizational forms.  You are correct -- an LLC gives you protection of your assets, with the simplicity of taxing your earnings as a pass thru entity.  Also make sure to go the extra mile to jump through certain "hoops" when operating your LLC.  For instance, even if you are a single member LLC you should keep financial statements, maintain separate accounts, and timely file any reports required by your state (even if they seem stupid).  This helps you legitimately hold yourself out as a profit-making entity and reduces the chance that the liability shield created by formation could be pierced later if you were challenged by a lawsuit.

The IRS has good information about taxes for LLCs on their website.

[UlyssesG]

I can concur on the $800 annual LLC charges.  Instead of that route I decided to get an umbrella policy that covers my business.  That cost is about half of the LLC fee but it would vary based on your line of work and coverage (I'm not in the landscaping business).

[Rekon]

I can concur on the $800 annual LLC charges.  Instead of that route I decided to get an umbrella policy that covers my business.  That cost is about half of the LLC fee but it would vary based on your line of work and coverage (I'm not in the landscaping business).

Thanks... What exactly is an umbrella policy? 

[Thegoblinchief]

Thanks... What exactly is an umbrella policy?

Umbrella policies are something you carry on top of your standard auto/homeowner's policy in case you're ever held liable for damages, etc. Typically they are sold in million dollar increments and can be quite cheap for the dollar amount. Much cheaper than even term life insurance, at least the last time I was quoted.

[usmarine1975]

Two thoughts. I was a self employed carpenter for 13 years as a sole proprietor its the easiest way to go.  Protecting your assets can be an issue it never was for me.

I looked into forming an LLC many use it because its cheap and easy. The attorney I talked to about it stated that it wasn't clean protection and at the time maybe 8 years ago not a lot of case history existed with LLC's and his concern was that it didn't give the protection you seek.  He felt a C corp was the best way to go with over 100 years of case law proving it worked. Granted more expensive and harder to form. I ended as a sole proprietor when I got out of it.  I would check with a good lawyer.

The umbrella policy would have to also cover your business don't assume that it does.  I bought one assuming all my properties and vehicles were included only to find out later that it only covered a third of what I had requested. The agents explanation was that it would have been more expensive to cover all that I wanted covered. He got fired very quickly.