I recently closed down my solo practice. It had grown to a point that I had to either expand, or slow down. I partnered regularly with C. Billingsley, who posts here regularly.
I cannot speak for him, but I honestly believe we had a working relationship that was pretty simple and straightforward. We both owned our separate business, and worked solo, unless we had a job that was too tough for a solo guy. We worked together on a job by job basis, and worked out the percentage of the job, or a "daily rate" for each project. It worked for us, and we would just issue each other a 1099 at the end of the year for "subcontracting".
I believe it worked for us, and each one of us were "scared" of screwing the other one over, that we were brutally honest on everything we worked on together. We had met through a mutual friend, and became fast friends. Six or seven years later, we are like brothers.
As far as the billing, if it was Chris' job, he would invoice it through his company, and I would get paid when he got paid, and vice versa for jobs that were mine.
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.
Or just move to Texas where we don't have a (expletive deleted) state income tax.
My advice would be to NOT go into a partnership. You could always share a big project. You have 1 sole proprietorship company get the work then sub-contract part to the other.
Partnerships will always result in 1 guy doing most of the work and a feeling of resentment because of this will be built up and eventually cause a friction between the 2 partners.
Take this from my experiences.
I was in your position, asking questions anonymously about 5 years ago. The advice i got on this board from Jimmy Cleveland was so valuable.
I would echo what he told me. Get Dan Beardslees book. It is a tool i still refer to. It helps with everything.
I let the market decide how big my firm would be. I needed a helper almost immediately and went from there. I did not take on a partner but did consider buying a couple of businesses with money i didnt have. This board did not hesitate to tell me how dumb of an idea that was.
A few of my ideas that have worked out well for me:
1. Start with construction & do not skimp on insurance.
2. Bid everything you can get your hands on.
3. Use every minute your not working on a project to go visit perspective clients. Make the sale.
4. I moved in next door to an engineering firm in a small town 45 minutes from where i live to be a convenient vendor for them and to be where no one else was geographically.
5. Do not take on debt to make a payroll. Its ok to borrow for equipment that lets you do more with less personel so long as you have projects to bill against.
6. Build an emergency fund into your monthly savings.
7. Have a budget, and a revenue projection...this took me 4 years to actually do and i wish i had done it sooner.
8. Dont be a one trick pony. Surveying businesses are built on construction, engineering support and boundary work and any other niches you can find.
9. Pay more for great help. You're only as good as your staff, so treat them right. If you're a hustler you'll have more than you can do before you know it, so get versatile people and utilize them.
10. Grind hard
If you do a partnership, please make sure that one of you has a majority (40-60 would be just fine.) Don't consider a 50-50, someone has to be able to make decisions.
Share your credit scores with each other before you join up. A bad score or tax lien on either of you will hinder all equipment purchases and will probably impact insurance rates.
Jimmy's suggestion / experience above is really-really good advice.
M
Lugeyser, post: 383525, member: 1249 wrote: I was in your position, asking questions anonymously about 5 years ago. The advice i got on this board from Jimmy Cleveland was so valuable.
I would echo what he told me. Get Dan Beardslees book. It is a tool i still refer to. It helps with everything.
I let the market decide how big my firm would be. I needed a helper almost immediately and went from there. I did not take on a partner but did consider buying a couple of businesses with money i didnt have. This board did not hesitate to tell me how dumb of an idea that was.
A few of my ideas that have worked out well for me:
1. Start with construction & do not skimp on insurance.
2. Bid everything you can get your hands on.
3. Use every minute your not working on a project to go visit perspective clients. Make the sale.
4. I moved in next door to an engineering firm in a small town 45 minutes from where i live to be a convenient vendor for them and to be where no one else was geographically.
5. Do not take on debt to make a payroll. Its ok to borrow for equipment that lets you do more with less personel so long as you have projects to bill against.
6. Build an emergency fund into your monthly savings.
7. Have a budget, and a revenue projection...this took me 4 years to actually do and i wish i had done it sooner.
8. Dont be a one trick pony. Surveying businesses are built on construction, engineering support and boundary work and any other niches you can find.
9. Pay more for great help. You're only as good as your staff, so treat them right. If you're a hustler you'll have more than you can do before you know it, so get versatile people and utilize them.
10. Grind hard
Thank you for the kind words. I am very glad it worked out for you.
Jon Collins, post: 381058, member: 11135 wrote: 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?
Yes unless you are okay with risking everything you have aquired personally to a unforeseen lawsuit. The expense os nothing compared to loosing your house. Our attorney keeps up with the minutes once a year and files the paper work $350. There are no or very little corporate taxes since the corporation shows no or very little proffit. Any excess of funds is paid to us personally as a bonus at end of year. And our taxes are paid individually. The trick is instead of a direct draw, I run it though the accountant and pay up front. Otherwise you might have to write that $20,000 check.
Me and a partner with 5 employees.
The trick is with an s corp the partnership is not a true partnership in legal terms. In other words the company carries the liability and any debt (once business has been proven credit worthy).
I guess I'm lucky my partner is 10 yrs my elder and was the first chief I ever worked under at one of the larger companies 23 years ago. We went separate ways during the course of our careers, but always kept in touch and 10 years ago started the business.
Our way of handling work load is he handles construction and I handle the surveying. Each have our own clients, if I am unavailable and my clients call the office he will do his best to help them out an I do the same for his.
Each has a crew that we run. On days when I'm slow he picks up my crew and vise versa.
As far as the equality of our working hours, it's a trade off. Sometimes I work 60hrs a week and he will be ther 30hrs and sometimes its the other way.
Trust, Being upfront about expectations and goals. And respect for each other.
Kind of like a marriage
Which ever route you go, I strongly recommend you have an account that handles payroll and taxes. Expecially with employees.
You don't want to be bogged down with IRS documents and figuring quarterly taxes, and employee withholdings. Accounting fees are minimal when compared to the amount of time "otherwise billable hours" you will spend figuring it all out and the time wondering if you did everything correctly.
Ron Lang, post: 384725, member: 6445 wrote: Yes unless you are okay with risking everything you have aquired personally to a unforeseen lawsuit.
Another way to address this is with insurance, which you ought to have anyway.
Jim Frame, post: 384743, member: 10 wrote: Another way to address this is with insurance, which you ought to have anyway.
True. But insurance doesn't cover all and the premium increase is rediculous the higher the coverage and the higher your billings. But yes insurance is a must any reputable client will require a certificate of insurance. And some dictate the amount of coverage needed. To me the protection an s corp offers is well worth the minimal expense of setting up and maintaining. Expecially when you are a small company that shows a loss on returns. The corporation doesn't pay a tax, it is differed to the individual owner or owners.
The insurance companies have the deep pockets to fight any claim, especially if it is due to negligence intended or not on the owners part.
There goes the house, college fund and so on.
Also as a corporate owner you get a nifty new title....PRESIDENT OR VICE-PRESIDENT. LMAO
I think I'll go with the LMAO, if that's an option.
Kris Morgan, post: 382767, member: 29 wrote: ...where we don't have a (expletive deleted) state income tax.
Are you serious right now?
Washington doesn't either; that is so awesome!..!
