Part Time Business Question

[lawnboiler]

Hey guys, I've got a question. One of my good friends and myself are going to start a part time mowing business this summer. We've got part of our equip. (still need to buy our other mower)and are finalizing a deal on a commercial account. This one account (about $17K / yr) to mow is all we want for now.
My question is this - should we go through the formality to incorporate (or start a LLC), or just buy an insurance policy and go with it? Thanks for your input.

[Elwood]

I strongly recommend developing a legal partnership. This is a commercial site you are working on, so I assume you have insurance, business license if needed, etc.?

If you plan to pursue this further, incorporation of some sort would be great, but with any partnership, plan a financial way "in" AND "out". At some point, you or your partner may want out. It is best decided NOW, not later.

Good Luck!

[MGO]

Check into forming an LLC in indiana. It is governed by State Law.

Here in Maryland it only costs $100 to form an LLC and it portects all of your personal assets from litigation......i.e. if someone sues your business and you are a SOle Proprietor they can go after your personal assets (house, cars, boat, etc...)

If you are an LLC they can only go after your business assets.......just like a Corporation.

[lawnboiler]

Thanks for the input. I think we're going to form a LLC.
I was just curious what other guys did? Thanks

[CCLS]

I started sole proprietor and then changed to an S-Corp last year. Reason being is for tax purposes.

I would recommend making your friend an employee. All you do is set everything up under your name and tell him you will pay him the same pay check as your self. This way you retain control of the company and reap all the profit the company makes after paying its expenses.

If you decide to break up down the road, your business will be screwed. Your partner might get in the "I don't care mode" and piss away all of your business. I have seen this happen before.