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What did it take to incorporate and get your business started?

Started by Thehardway, May 14, 2014, 10:14:46 AM

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Thehardway

I have been sawing as a hobby now for about 5 years.  I bought my mill primarily to produce timbers for my house and then odds and ends but not for production type work.   Now that the house is built, I have had neighbors asking me if I want the trees they need taken down and I have been doing some custom sawing for folks that want something they can't buy at a big box store.  I have tried to keep income limited to below tax threshold each year or to do bartering.  I now see that it would probably be beneficial to me to incorporate as an LLC, if nothing else just for the liability and tax write off benefits potentially available.  I don't plan to get real big or hire anyone other than family or friends on a part time cash basis.  I would like to be able to purchase my fuel and materials tax exempt and sell the saw, tractor, etc to the business.  Also be able to do some advertizing and write that off as well.  My business plan is to primarily cut waste material and turn it into fireplace mantles, tables, furniture and household accessories sold at local craft exhibits etc.  Other business would be downed tree removal, brush and small lot clearing, custom sawing long boards & timbers up to 32' and maybe a few pre-cut timberframe shed kits.  Custom planing services up to 18" wide, custom hardwood moldings, and sale of pine and cedar shavings/sawdust for animal bedding and maybe some firewood.  This will be a side business in addition to my 9-5 job for now and then will be full time once I reach "retirement" age.

So here are my questions:

1. How did you go about legally incorporating your milling business and what did it cost.
2. Are there certain tips about how to structure company.
3. How do you go about selling personal owned equipment to the business.
4. What tax write offs can you take advantage of legally.
5. Are there any disadvantages to incorporating
6. What amount of insurance would be reasonable for the corp. starting out and what should it cost?


Any other helpful insight or tips would be appreciated.

Thanks!


Norwood LM2000 24HP w/28' bed, Hudson Oscar 18" 32' bed, Woodmaster 718 planer,  Kubota L185D, Stihl 029, Husqvarna 550XP

Leigh Family Farm

Thehardway,
There are a few threads in the business management section that can answer almost all of your questions. I would start with a search there.

For the first 5 questions, talk to a tax accountant. They can guide you properly on how to transfer personal goods to a business with out incurring to much tax liability and how to get the best tax advantage for your situation. For the last question, contact MIA Insurance (Forum Sponsor on the left) about insurance. A lot of people on here have used them and from their comments have been very helpful in getting the right amount of insurance.

There are no problems; only solutions we haven't found yet.

Kingcha

If your not hiring anyone an LLC does not protect you completely from Liability.   Anytime you yourself cause injury to someone or something an LCC will not protect you.  I would talk to a CPA.  I myself am have been just cutting for myself but do plan to start cutting for others if I find a need.  I will be just doing a schedule C for now as I will not be hiring anyone and do not want to spend the extra money.
   

Matt
a Wood-mizer LT15 10hp Electric, 45hp Kioti tractor, electric smoker, wood-fired brick oven & yes a custom built Solar Kiln

Raider Bill

The First 70 years of childhood is always the hardest.

sealark37

Find a Certified Public Accountant who will take time to listen to your situation and answer your questions.  Depending on time required, the CPA will cost a couple hundred.  Incorporation can be done without an attorney, but will still cost a couple of hundred.  A new checking account and checks will run about a hundred and a half.  Business cards and invoices, another hundred.  Talk to your insurance guy about an umbrella policy to cover you.  Never tell anyone that you prefer cash payment, even if you do.  Regards, Clark

LaneC

  Why not say that you prefer cash? I love cash :D I did not know you should not say that. Can "they" get you for saying you prefer cash? This is interesting.
Man makes plans and God smiles

drobertson

an accountant would be a good thing, cash is as well, get your ducks in a row and do cash, just know the tax laws; There are those who know the loops, and those that don't want to mess with the loops. Who ever goes through the hoops will be paid for it.  Just have to know the loops and where they are.  Stealth is good, always has been, how far can you run under radar, and how long and  far can you do it?
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,

dgdrls

Quote from: Kingcha on May 14, 2014, 10:58:18 AM
If your not hiring anyone an LLC does not protect you completely from Liability.   Anytime you yourself cause injury to someone or something an LCC will not protect you.  I would talk to a CPA.  I myself am have been just cutting for myself but do plan to start cutting for others if I find a need.  I will be just doing a schedule C for now as I will not be hiring anyone and do not want to spend the extra money.
   

Matt

This is an interesting point.  Would hiring your spouse under the LLC structure alleviate this issue??

DGDrls

backwoods sawyer

I paid a CPA $450 and two days later had my EIN # and was making money making sawdust.
Could have done it myself online for about $200, but saved any head aches by using a CPA.

The CPA later advised me to go sole propriator due to the leagalities of divorce.
Backwoods Custom Milling Inc.
100% portable. . Oregons largest portable sawmill service, serving all of Oregon, from our Backwoods to yours..sawing since 1991

leroy in kansas

I've ran my business under a "C" corp. for the past 22 years. The greatest advantage is being able to put $$ into an IRA or SEP plan. There is an advantage also from purchasing everything before being taxed from your personal income.

Your getting good information from the guys. "Hire a CPA". I would go with a young aggressive new start up CPA. They generally have more time, are up on all the latest "stuff" and will usually try to keep you as an account. I got in with my account just this way and have stayed with him. He is so busy now he isn't taking new accounts.

Leroy

Thehardway

Thanks guys for all the replies.  I'll check out the Bus. mgt. section.  Looks like there is no way to avoid forking out cash to make cash :(  I'll start looking for a good CPA.  prbly should have done it years ago anyhow with the way tax laws are these days.
Norwood LM2000 24HP w/28' bed, Hudson Oscar 18" 32' bed, Woodmaster 718 planer,  Kubota L185D, Stihl 029, Husqvarna 550XP

highleadtimber16

All I did was buy a mill and start sawing and selling. I think your guys rules, are a little stiffer down there though. I now have a business number and occasionally charge tax to customers. Though I usually deal with cash and I really like cash  ;D
2011 Wood-Mizer LT 40 hyd w/ 12' Extension,
EG 200 Wood-Mizer
Cutting Old Growth Cedar from Queen Charlotte Islands.

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