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How the buisness is ran

Started by Nvfd3052, November 18, 2012, 12:15:48 PM

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Nvfd3052

I told myself I was going to wait till spring to get me a mill, but I am gettin jittery and don't think I am going to wait that long. I am looking at a lt35 hydro and I plan on trying sawing mostly portable. I have a full time job so I would just be doing this part time.  How do you guys run your mills as a buisness? As in a llc or just cash in the pocket. When it comes to the legal mumbo-jumbo I'm as dumb as a bag of hammers. Thanks in advance guys
Woodmizer LT35HDD18 diesel
Stihl ms290
Deere 260 skid loader
01 Chevy 2500hd duramax
And a wife that loves me!

Kansas

We run as a chapter S corporation, for liability reasons, plus its easier where two of us each own equal parts of the business. If you are just yourself, part time, I would think sole proprietorship would work. You could go the corporate route for liability reasons. Not a bad idea. And you should be able to file those papers by yourself. A lot depends on what you are trying to accomplish. You will have deprecation on the mill for a deduction. Ditto for mileage moving the mill. Fuel, blades, all the other expenses. And if you just happen to have a cash sale or two, well if a tree falls in the woods, and no one hears it, did it really happen? But expect checks as a normal part of business. If you are just doing part time sawing, I doubt credit/debit cards are necessary, although there are some routes you can go without a bunch of money involved.

Nvfd3052

Thanks Kansas, I never thought about deductions and stuff like that. From what little I know I like the llc route because as I understand it seperates my fianaces and buisness finances, so if something happened I wouldn't loose the house. Like I said tho I am no expert so correct me if I am wrong.
Woodmizer LT35HDD18 diesel
Stihl ms290
Deere 260 skid loader
01 Chevy 2500hd duramax
And a wife that loves me!

Magicman

Mine is an LLC and all income is showed, even cash.  The income is needed to prevent the business from ever being classified (by the IRS) as a hobby.  Sure, I "tucked" the cash when I started, but life is simpler when I do not.

I also claim all of my expenses, and I mean all.   ;D
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

Kingcha

If your running the mill yourself the LLC does not give you complete protection.   I ran a small restuarant with a liquor license and was told not to bother going the corporation route because I personally could still be sued.   

So If your running the mill yourself and make a mistake they can still come after you.  You say you will be doing this part-time I am not sure if there would be much advantage to a LLC.   I would talk to a GOOD accountant and mabye a lawyer as well.   Might be worth the $ to make sure as tax laws and liability issues do change.
a Wood-mizer LT15 10hp Electric, 45hp Kioti tractor, electric smoker, wood-fired brick oven & yes a custom built Solar Kiln

Kansas

Its amazing how "all" those expenses can add up. And you are right.  All. Just remember, if you have to go to an auto parts store to get a B57 belt for an LT40 (don't know what the 35 uses) well the fuel is a perfectly legitimate expense. And the grocery store or bar just happens to be on the way home.

I would suggest talking to a good tax accountant. We went the Chapter S route. Others have gone the LLC route. A good friend of mine who runs a one man auto repair shop with his wife went the C route. And tax rules and laws change. You don't need a CPA, but you need a good one.

Just saw the last post about the liquor license. That might have something to do with it, dunno. You are right about a good accountant, maybe a visit to a lawyer. My sister the lawyer (hangs head in shame here) advised me to go the S route. Its been so long ago, I don't remember why now. I know I personally took the paperwork to the Secretary of State's office and filed it. It didn't cost much at all. I think here in Kansas its 35 or so bucks a year to keep it up. I don't know how other states do it.

Kingcha

Not sure about the tax advantages with an LLC but the way it was explained to me was if I was an absentie owner with a manager then going to the corp. route would make sense.  But when ever you have hands on you assume person liability......but that was years ago.   Always have good insurance.
a Wood-mizer LT15 10hp Electric, 45hp Kioti tractor, electric smoker, wood-fired brick oven & yes a custom built Solar Kiln

pnyberg

When I talked to an accountant before setting up the business, he claimed that to a large degree the amount of limited liability provided by an LLC has not really been tested by court cases because cases are so often settled out of court.  Still it can't hurt.  In most states it's not very expensive.  You can probably set it up yourself online.  Keep in mind that the LLC registration needs to be renewed annually.

You'll want a checking account for the business, and I'd suggest a credit card for the business as well. 

You need to understand small business income tax deductions.  The best book I found on the subject was 'Deduct It!' by Stephen Fishman.

Get and keep receipts for all business purchases.  Get a vehicle mileage log book for your truck.

Get liability insurance.

--Peter
No longer milling

pnyberg

Oh, and I'm with Magicman, cash payments are 'on the books' same as checks, and largely for the reason he stated; it's important that the business show a profit so that the IRS will accept that it's a business, not a hobby.  But I also do it so that I have accurate records so that I can tell how the business is performing.

--Peter
No longer milling

Magicman

I make a photo copy of every customer's check, and the deposit slip and they are then stapled to my copy of the sawjob invoice.  The same goes for cash.  A denomination corner of the cash is visible along with the deposit slip.  I balance my books quarterly, and those copies surely simplifies the process.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

NWP

Quote from: pnyberg on November 18, 2012, 03:41:15 PM
  Keep in mind that the LLC registration needs to be renewed annually.


Not sure if this is different depending on what state you're in or not.  In MO, I don't have to renew my LLC.  If the business is a corporation, it has to be renewed.
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drobertson

simple S, works out great,  keep your job,  david
only have a few chain saws I'm not suppose to use, but will at times, one dog Dolly, pretty good dog, just not sure what for yet,  working on getting the gardening back in order, and kinda thinking on maybe a small bbq bizz,  thinking about it,

Magicman

Quote from: pnyberg on November 18, 2012, 03:41:15 PM
  Keep in mind that the LLC registration needs to be renewed annually.

For the past two years, I have had to renew mine here in Ms.  There is no charge, and it only takes a couple of minutes online.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

Nvfd3052

Wow, thanks to everybody for the great information! The forestry forum has yet to disappoint me. I will have to find me a account and see what they say. So many options that are close to being the same, I don't want to get it wrong or the mean ol tax man will have my butt.
Woodmizer LT35HDD18 diesel
Stihl ms290
Deere 260 skid loader
01 Chevy 2500hd duramax
And a wife that loves me!

red oaks lumber

if your only going to be part time, sole prop. should suit you fine. keep track of your income and expense file  a 1040 form keep it simple. the less the goverment knows the simpler your life will stay.
i have an s corp. and you are still responsible for any lawsuit or anything.
i dont buy having to show a profit to be considered a buisness, isnt that where depreceation and inventory and the likes come into play?
in wisconsin if you are anything other than sole prop. you have annual fees with the state. one more reason to stay sole prop. they dont need to know about your buisness.
the experts think i do things wrong
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Okrafarmer

You should consider liability and other forms of insurance, so check out Margeson and Associates, they are a sponsor for the Forum, and you will find their logo on the sponsor list on the left side of your screen.
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Sawdust Lover

There are many ways to do it but if you are working for anyone with your mill you have to be protected. I had a construction buisness in the 90's in Vermont and was not an LLC or incorporated. I was sued and lost everything. A friend of mine is or was a logger and had a great buisness and a friend of his was helping him out for one day and was hurt on the landing and he lost everything. I also do this part time and I have an LLC. I also am very well insured and even have workmans comp in case someone is helping me. I have an accountant that can get into my quickbooks from her house and keeps my books straight. It all takes a little more money but I can saw at ease knowing everything is being done right.

schakey

Just my 2 cents thrown in, some receipts fade fast and become unreadable.
Get a cheap scanner to keep copies  on your hard drive and some other media.
Think-Dream-Plan-Do

terrifictimbersllc

Don't know about IN but in the 3 states I do business in, sawing is subject to sales tax and one needs to register with the state to have permission to collect it. With sales tax, one owes it to the state whether one collects it from the customer or not.   Also my resident state has business property tax, all the personal property (assets) in my business I pay property tax on. A hobby sawmill is not taxed in this respect but once it is business property, it is.   On the LLC subject, nothing about that protects it from taxes or in that matter liability.  It just separates your LLC from you personally.  In making an LLC, it is as if you are creating a new person named XYZ LLC.  You'll be the owner of it. Regarding multiple states,   I must register my LLC with each state's Secretary of State I do business in.  In the 2 nonresident states this is called a "foreign LLC".  In my own state my LLC is a "domestic" LLC.   If you live near the border, think twice about whether you do business in the other state.  Not only will your LLC have official interactions with that state, but now you will also have a personal nonresident income tax form to file there too.   It isn't  worth it if it is just a job or two a year or maybe a really big job.   Each state has its own laws about LLC fees and taxes.  You can find this out in advance or wait for overdue taxes, interest, and penalties to catch up with you.  ;D ;D ;D
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