[NeedCoffee]

Quick question (probably with a long answer). I am well aware of the advantages and disadvantages of all the legal structures out there (LLC, Sole P, C Corp, etc etc). My question is, for landscaping specifically (maintenance and install), Which is the best suited structure? What do you have?
Thanks,
ET

[Paul]

I guess the better question would be where do you want your company to go? If your just going to be a small operation, $200 to $500K a year gross then stay a Sole P. If your going over that then a talk with a GOOD accountant/tax lawyer (with emphasis on the latter) might bring a different solution.

Ok you've got the easy part, now the caveats, if you do any work that involver's public access ( parks, city work, retail property, government projects.........) then a Big C is the only way to go. This means no writing a check out to yourself unless it has taxes taken out, you do't pay the personnel phone bill with the company money, you have everything business wise in the corporate name.

If you think you are going to get even larger then you might want two Big C's one to own the equipment the other is the working company.

[NeedCoffee]

Advice taken.
I have C-corp now, for another business. I like the C because you get to spend (including depreciation) first and get taxed on what's left. But I do not like the paper work/compliance (board of dir meeting, stockholder meetings, minutes, etc etc) especially since I am a one man operation with one shareholder, boad member, employee...
I do like the protection (liability), but you have to keep up the above paperwork current to keep that corporate veil bulletproof!
Now, provided I am well insured, wouldn't a sole p be safe?
I'm throwing ideas out there to see what fits...you can always incorporate a Sole P. But, a C corp dissolution is a nightmare process.
Just thinking out loud.
Thanks,
ET

[Bill Schwab]

The interesting part about insurance, is they call their own shots. Anytime you get into a serious lawsuite, you should not trust the insurance company to take care of things. You need your attorney to represent yor interests. All the insurance company will do is limit THEIR obligation, and if it means you get to pay part of your way, and they get off paying less, they really care not about you.

We had this discussion, or a similar one a month or so ago. No matter how much insurance you have, it does not make you lawsuite free.
In this day and age, lawyers interchange rear ends for mouths and talk their way into attaching personal assets of many who are incorporated. They succeed in doing so even if the owner was careful and did not comingle funds. In the event of a tragic instance for example, and knowing full well that the US civil justice system makes all parties pay thier own legal bills, that rear end a lawyer sits on all day will be inserted into their mouthpiece and they are going to use it's power to grab anything that is not nailed down and leave it up to you to prove weather you get to keep it, no matter how much insurance or what corporate vale you have.

[johnkeegan]

What about subchapter S corp.? My accountant says they have less requirements than C corp. Currently I am a sole prop., but due to tax considerations mostly he advised me to switch to a S corp. Either way he said, as noted here, that there is no real added liability protection from incorporating (because they'll come after everybody), just protection from creditors.
Any feedback is appreciated. It's all gobbly gook tax/legalese to me.

[Bill Schwab]

The best way to cover you rear for liability is with an LLC, not a corp. Still, with a tightly held company, some weasel is going to find their way into your pockets given the chance if they see enough money to chase.

[site]

I am set up as a C corp. It's main advantage for me is that I have set the tax year to end in March. That way my taxes are figured at the weakest point of the year cash wise. If I were taxed on what I have in January I would pay out a lot more.

[Paul]

I guess not many here have been sued, it gets ugly fast, We ran as a big C and never had a problem with lawyers going after me as a stock holder of the C corp. Of course we ran with 5 M of insurance which causes insurance companies to really look out for their own interests. We still used two C corps.

[start2finish]

Paul, without being nosy, I am extremely curious what kind of mistake in the green industry would lead to a 5M+ lawsuit?

[Paul]

We built parks for small children.......... Wait till you see what little Johnny is worth at 5 years old.....................

[johnkeegan]

What about the tax advantages of each? Have any of you found the tax savings worth the added legal/accounting costs of incorporating?

[Bill Schwab]

We saved 36K the year we incorporated to an S corp over being sole prop.