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welcome to lawn care tips and tricks my name is blake hawthorne owner of it's a server tonight we'll be talking about the not so fun side of business we're gonna be jumping into the nitty-gritty things on what you should do on the office side and keeping up with your finances making sure that you're running the company the way that you need to and taking care of payroll so guys let's go ahead and let's jump right into it because i know that this is going to be painful but a lot of you need it to make sure that you're doing the right things within your company okay guys so the first thing we're going to talk about is how you should identify yourself within your city or within your state as a business so for a lot of you guys that are just kind of mowing on the evenings or moan on the weekends you're probably operating just underneath your name having your customers either pay you cash or to pay you a check to your personal name well the next step that you need to take within your company to get it established would be to set it up as a dba and so what you're going to do is you're going to go down to the courthouse you're going to set up as whoever you are doing business as whatever you want your lawn business to be even if it's say i'm blake hawthorne doing business as blake hawthorne's lawn maintenance you know i set something up like that within the state to identify and open up a bank account because you have to have the dba filed at the courthouse in order to open up a bank account within a company name the next thing that you're going to look at as you're growing your company is going to be if you're going to be a sole proprietorship or an llc i think as long as you stay you know just a couple employees and yourself and it's like one truck and setup that a sole proprietorship is fine but as you start getting multiple crews multiple employees getting up where you're paying into workers comp and all these taxes and things within the company that you want to look at getting an llc the reason you want to get an llc is so that it actually protects you legally if somebody goes to sue your company if you're filing under a sole proprietorship or a dba and they come and sue you they can not only get what your company has at that time but they can also get anything personal assets that you have as well this is a nice division between your personal and your business to protect you legally and then as you grow your company and you decide that hey i'm i'm ready to take the leap i'm ready to go on payroll i understand it's going to hit me on taxes but i'm gonna have other benefits from doing it that's when you will look at doing an escort so once you put yourself on payroll and you're paying those taxes on yourself is when you file as an escort that's the steps that i'm taking within my company right now because i'm not i'm done pouring all my profits into growing my company i'm very comfortable with where i'm at and i want to expand on it and i have some benefits for myself and my family by putting myself on payroll and not just taking an owner's draw like i have for the last several years so that's the three things that i would look at is what genre do you fall into as a business owner are you just starting out once you get i would say above two employees i would go from the s corp and start looking into an llc to protect yourself and then once you get it built to a point where you're not just taking an owner's draw and you're actually going to be going on to payroll which will help you a lot more with your finances that's when i would start to look at going in as an s corp company okay guys the next thing that we're going to be looking at is a debate between do i pay my employees 10.99 or do i put them on payroll and i feel like this is a gray area that a lot of people try to dance so for those of you that have been keeping up with us over the past year you know that part of our 200 000 loss we faced in the 2017-2018 range was part of that was a 21 000 workforce labor audit and so what this meant is that the workforce labor audited me they came in went through all of my payroll they looked and saw who was being paid as an employee who was being paid as a subcontractor and then they figured out if they were being paid as a subcontractor if they actually fell under the umbrella of what a subcontractor is or if they were being treated more like an employee things that they looked at were are they using their own tools are they clocking in and out are they choosing their own schedule we found out that even though some of the guys were using some of their own tools they were still coming out to a job site and working in x amount of hours and they weren't getting paid by the job or by the foot but they really fell underneath what they consider an employee and so at that time they audited all of our payroll and we had to pay a 21 000 fine which was matching x amount of their payroll each and every year and then paying that back to the unemployment office and so guys make sure that if you have guys that are truly employees showing up working with you every day using your tools and equipment using your trucks and equipment go ahead and just do the right thing focus on what you need to as a company and put them on payroll it's going to put you leaps and bounds ahead especially the one thing that did save me was the fact that we had already switched to payroll we had already got all of these things in line so they came in and audited us they saw that for the last year or so that we had already been doing the right things and so they had a little bit of grace with us in our company because i didn't learn until i switched accountants about the gray area that we were in that was really black and white and so when the workforce labor came in they saw it as black and white and everything that didn't reach their standards we got penalized for so guys once you've started your company you know what you're going to be you know an s corp a sole proprietor an llc whatever it is then you know the type of employees you're going to have if you're going to be subcontracting a lot of this work out to other companies and other individuals or if you're going to bring guys in house to use them as your own employees the next thing you're going to be looking at is your taxes how can you keep up with your books and your taxes to make sure at the end of the year if you need to make an investment you make that investment to keep from paying in a bunch of taxes or that you have the money set aside to pay the taxes that you need to pay and so guys what i want to talk to you about is what i did for a long time before i got quickbooks and was tracking everything is i would literally just take my bank statements or i would take all my receipts and i would keep these things organized and so i created an excel sheet that had all of my expenses things like our rent things like our utility bill our phone bills our internet that we were using for our billing and our company fuel receipts food receipts food when i would take clients out and then food if i would you know do like a cat
Thanks for your comment Jutta Manocchia, have a nice day.
- Bruno Hanz, Staff Member
hey it's Jason Creole you know recently I had someone asked me to give some some thoughts on the different ways you can set up your business for tax purposes you know whether you want to be a sole proprietor an LLC or the other that would probably be applicable to a lawn business would be an S corporation so you know I I don't think I need to to fool anyone thinking that I'm an attorney or in the county I'm neither and I rely on both but I've had enough conversations with my accountant and done some research to understand at least the basics basic differences between these three types so let's let's just briefly talk about those and I would encourage anyone who is in the law business to do a little research on the line online or talk to an account and try to figure out what's going to be best for you so let's start with sole proprietor obviously the easiest one you simply can go your Town Hall City Hall and get a business license and declare yourself to be a sole proprietor what that basically means is that you and the business are one your the the main the the benefit is how easy it is to set up which is there's next to nothing to do the downside is the lack of protection like said you and your business are one and so technically if if you have a lawsuit against your business they can also come for your personal assets as well because you are one with the business so that is the easiest now how many times the people get sued in the law in business you know well I'm sure it does happen so you know there may be some businesses where that makes sense or if you're just real small one and get starting a long business and to get in as simply as possible maybe that works for but just understand that there are that is the risk involved is that your personal assets are liable so next would be an LLC which offers you that level of protection to where your business is separate from your personal assets so in an event of a lawsuit or something you know it's separate they could take your business assets but the way I understand it your personal assets should be protected now I've also had explained to me that in an LLC your you have unless you publicize yourself as an LLC then then you're not protected so what does that mean you know basically when you use your business name to add kama LLC to let people know that you are an LLC so you know that's important I try to do that I'm currently operating as an LLC myself so that that's the the main difference it gives you that protects true level of protection yeah and you do have to file to become LC you know at least idea had to file articles of organization with my with the state to form a separate entity so you know anyway so then the the third one being an S corporation the the way I understand it and again I'd encourage anyone to do the additional research but you know when you're self-employed you pay self-employment tax so you're paying basically you're being double taxed and paying the FICA double basically being double tax you know instead of paying seven and a quarter percentage you're actually paying that as the employee and again paying the employer half of that on your income so you're paying that extra I guess seven and a quarter percent well they Vantage the way I understand on an S corporation is basically you can become an employee of your own business and so I'm Jason cRIO I own the lawn business and but I've hired Jason Creole to be the manager of my long business and so I pay him let's just say for example $50,000 salary you you're allowed to pay yourself a reasonable salary well on that fifty thousand you're not being double taxed on that so if that makes sense you're not having to pay that extra seven and a quarter percent on the on your actual salary so you can see how that saves your money not saves you money yeah you can't pay yourself three hundred thousand dollars you know if you get be a big bit you know has to be a reasonable salary so you know whatever is reasonable for what your role is but it saves you from being double tax on that amount of your salary so I think the diffs advantages is there's probably a way I understand a little bit more expense in setting up an S corporation as far as paying your accounting or attorney to do that I think may be a little more complicated and and I know at least for me with being an LLC I think S corporation you're paying in quarterly taxes you know each year on the previous year's income you're paying quarterly estimates the next year so anyway that is a brief overview from a long guy not an accountant not a lawyer but for me I have I am a LLC but I do think at one day I may become an S corporation like I say to save myself that extra seven and a quarter percent on whatever salary I want to pay myself hope that makes sense talk to any county or a lawyer Thanks
Thanks Filomena your participation is very much appreciated
- Bruno Hanz
About the author
I've studied statics at The American College of Financial Services in Bryn Mawr and I am an expert in surface physics. I usually feel refreshed. My previous job was forest ranger I held this position for 19 years, I love talking about video game collecting and beat making. Huge fan of Biggie Smalls I practice windsurfing and collect first day covers.
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