Starting up questions

I would like to just make a remark...because I don't want to influence anybody's decision.

I have been in several partnerships, corps and business affiliations with other surveyors and engineers. My suggestion would be "don't enter into any sort of business agreement with anyone unless you can see a definite and tangible rea$on that will increase your bottom line". I have made the mistake before of jumping into something with a promise or guarantee of work. It all turned into blue sky.

Your mileage may vary.

I have a licensed business partner and we are a PLLC. I'm not impressed much with the advantages a PLLC offers.

Look into a Subchapter S corporation and talk to an accountant/tax attorney.

When you have considerable amount of property, houses, buildings, vehicles, boats and many other possessions that are worth mega bucks being able to blend into corporate, LLC or other group, the protection makes sense,

When you can keep your at risk down to a minimum, sole proprietor has advantages.

It takes mega bucks to pay all the corporate taxes and fees and matching wages and benefits that are involved with the group.

When operating as a sole proprietor, most every expenditure is a tax write off and you only pay taxes on profit.

Then there is a space in the middle where you will probably lose everything you make.

They say something like this about gambling or loaning money - "Don't budget any more than you can afford to lose."

:beer:

I'd suggest hiring a secretary, and skipping the partner. Another surveyor I know did this. Very good idea. She even learned to do limited CAD.

N

Jon Collins, post: 381041, member: 11135 wrote: I am in talks with another surveyor who started on his own as a sole proprietor a year ago, he's doing good and debt free. I am still corporate. We are thinking of joining forces with the idea of expanding more in the future. We have the market in our favor. But the more we think about incorporating into an LLC the more it seem to be difficult for only 2 people. Are most independent guys just solo doing sole proprietorship? Does anyone run a real small 2 to 4 man shop? If I started my own sole how can we still work together billing, contract, etc....? To expand to 2 full guys we would need some small financing, mainly to buy RTK and outfit another truck. Any help much appreciated.

Myself and a other RPLS are currently setting up a LLC right now. Only way to go in my opinion with us both owning homes, cars, other toys, 401ks,cash and families. Asset protection is what we are after. Someone can still come after our personal assets, but the LLC creates a clear line of seperate on between personal and business

TXSurveyor, post: 381057, member: 6719 wrote: Myself and a other RPLS are currently setting up a LLC right now. Only way to go in my opinion with us both owning homes, cars, other toys, 401ks,cash and families. Asset protection is what we are after. Someone can still come after our personal assets, but the LLC creates a clear line of seperate on between personal and business

That makes sense for asset protection. Is all the hassle, accounting expenses, attorney expenses, office expenses etc all added up worth it for only 2 people?

I think it is worth it. We ran a rental property business together for a couple of years before converting to a LLC to get the asset protection. CPA handles all the tax stuff, sends us an email once a quarter asking permission to file some paper work on our behalf. Our annual bill for him went up maybe $100. LLC cost us around $800 for an attorney to draft it and up file it with the state and write up a operating agreement. Operating agreement will put it in to writing about who owns what and what steps must be taken and in what order if one of you dies (makes sure your beneficiary gets treated fairly and remaining party does too)

I was all ready to go LLC, but my accountant actually recommended against it in favor of sole proprietorship. I thought it might be cool to be LLC just because it's what all of the cool kids seem to be doing these days. She said the protections are not really there. Your personal assets are still exposed. I suspect that there are a lot of accountants that sell the notion of an LLC to make the money from building and maintaining it. Now with a partner, I think an LLC or LLP makes sense because you can establish clear rules for the partnership.

I agree that is the case with a single member LLC. Prior courts have ascertained that the apearance was there that a LLC was created solely for the purpose of personal protection and the business didn't operate as an LLC. More than one member should operate under a LLC, at least that's the advice i was given by 3 attorneys. My CPA said he didn't have an opinion on the matter. Haha

Shawn Billings, post: 381061, member: 6521 wrote: I was all ready to go LLC, but my accountant actually recommended against it in favor of sole proprietorship. I thought it might be cool to be LLC just because it's what all of the cool kids seem to be doing these days. She said the protections are not really there. Your personal assets are still exposed. I suspect that there are a lot of accountants that sell the notion of an LLC to make the money from building and maintaining it. Now with a partner, I think an LLC or LLP makes sense because you can establish clear rules for the partnership.

Move to Kansas where the (expletive deleted) governor and his cronies foisted a BS plan on the poor starting in 2012. If you are an LLC or higher, you pay no State income tax. Sole proprietors pay the bill for all those who aren't paying. The stated goal was that it would cause all sorts of companies to relocate here and thus do all sorts of great and wonderful things. The only new "companies" are those who were already here and created an LLC so they wouldn't need to pay taxes. A high percentage of farmers are now LLC's for this reason only.

If the LLC doesn't pay tax, aren't distributions to you still subject to similar income tax rates?

Apparently not. That's based on all the (expletive deleted) written in the newspapers and mouthed by TV reporters. Total State income has dropped like a rock off a cliff.

Bill93, post: 381146, member: 87 wrote: If the LLC doesn't pay tax, aren't distributions to you still subject to similar income tax rates?

Income and loss is in most cases reported by a schedule k-1.

Holy Cow, post: 381137, member: 50 wrote: Move to Kansas where the (expletive deleted) governor and his cronies foisted a BS plan on the poor starting in 2012. If you are an LLC or higher, you pay no State income tax. Sole proprietors pay the bill for all those who aren't paying. The stated goal was that it would cause all sorts of companies to relocate here and thus do all sorts of great and wonderful things. The only new "companies" are those who were already here and created an LLC so they wouldn't need to pay taxes. A high percentage of farmers are now LLC's for this reason only.

We don't have state income tax on personal or corporate.

While neither of my partnerships were in surveying, both were horrible experiences despite feeling good about them when initially jumping in. I will NEVER do it again.

On personal liability and corporations from wikipedia:

"Despite the terminology used which makes it appear as though a shareholder's limited liability emanates from the view that a corporation is a separate legal entity, the reality is that the entity status of corporations has almost nothing to do with shareholder limited liability."

Thanks for all the advice. I also wonder if we can both be sole and work DBA some name so we can work with each other on projects and send 1 bill?

Jon Collins, post: 381679, member: 11135 wrote: Thanks for all the advice. I also wonder if we can both be sole and work DBA some name so we can work with each other on projects and send 1 bill?

One of you can bill the job and then pay the other "partner" his share, which you would account for with a 1099 at the end of the year.

I've been a partner (not in surveying) it didn't work out. Seems the profits disappeared and I never saw a penny.

I'm sole proprietor and like doing it that way. No need to partner up if there is plenty of work out there.

You may have found a good partner but my partner bridge is burned. Nothing but regrets.

You will either be looked at as the 'extra wheel' or you will be looking at the partner in the same manner. But at some point each of you will look at each other as not doing their part.