Need advice starting my business (LLC,DBA)

L

Lakeside Detail

New member
Joined
Feb 1, 2014
Messages
145
Reaction score
0
Hi everyone, after looking for a month I found a GMC Savana 2500 that I am going to use for mobile detailing.

I assume I want to title the van under my business name so I can deduct it come tax time. I have not done any business paperwork yet or filed a DBA.

I am interested in forming a LLC for my business, mainly because it seems like the popular thing to do, and less liability. I just don't know if its best for me. I am just confused if I do the LLC paperwork do I still need DBA. After forming the LLC for my business what paperwork do I take to DMV to register my van under business name.

Also what are the benefits to LLC vs. Sole proprietorship

Thanks for the help guys, I'm new to starting a business so any help would be great.
 
When first starting out being properly insured is much more important than being a LLC or corporation.

Check with your local laws, but I see no reason you should register your vehicle under your business name. You own the business, you own the vehicle, not really going to gain you much.

Until you get to the point where you have employees there are no real benefits to a LLC, in my opinion.
 
I would explore a SUB S corp structure, if I was you. I would also just reimburse mileage (which needs to be well documented) over putting the car in the business name. Your GL should cover onsite and mobile and hired auto liabilities, and if you have employees you will have to decide if you are hiring them or contracting them (for WorkComp purpose, FICA, SUTA etc..)
 
You don't need to register a vehicle under a business name as a sole proprietor to deduct its use on your taxes. Also when looking for insurance you need to make sure you know what your deductible is for the most possible instances you will deal with. Some things that could occur could cost less to repair than the cost of your deductible. So finding the lowest deductible and keeping premiums low would be best. Just starting out I would keep everything as simple and inexpensive as possible. Something as good if not better than insurance and being a LLC is having prepaid legal services. It's cheaper than insuring a detailing business, usually, and can be used for personal and business reasons. I would put my time, money, and energy into starting the business well organized with a business plan and goals for the next 3-5 years. Putting your money into reliable, but not the most expensive equipment, will pay dividends and help you be confident to take on most jobs presented to you. Starting with the customer/client base to give you steady cash flow is going to be as important as anything. That said, choose your marketing carefully and research what works best in your area to reach the clients you want/need. Renny Doyle's book explains all of this very well, and is proven by Renny's success. I highly recommend you purchase and read his book before even registering your DBA name. While it is tempting to just run out and start detailing, the business end of a detailing business is what makes the money. Learn from other before doing the trial and error routine on your own.
 
Well lucky for you I am taking an Intro to Business class in college and we just went over Business ownership, I do not own my own business but this is straight from my textbook. Hope this helps you understand.

Sole proprietorship:

Advantages:
Ease of starting and ending the business- all you do is buy or lease the required equipment. It's just as easy to get out, you just stop doing business.

Be your own boss

Pride of ownership

leave a legacy- owners can leave an ongoing business for future generations

retention of company profits- owners not only keep the profits earned but also benefit from increasing value as the business grows

No special taxes- all profits made are taxed as personal income of the owner, however owners do have to pay the self employment tax for social security, and medicare.

Disadvantages:

Unlimited Liability- any debts or damages incurred by the business are your debts and you must pay them, even if it means selling your home, car, or whatever else you own.

Limited financial resources- Funds available to the business are limited to what the one owner can gather.

Management Difficulties

Overwhelming time commitment

Few fringe benefits

Limited growth

limited life span

LLC

Advantages:

Limited liability- Personal assets are protected.

Choice taxation- LLC's can choose to be taxed as partnerships or as corporations

Flexible ownership rules

Flexible distribution of profits

Disadvantages:

No stock

Limited Life span

Fewer incentives

Taxes- LLC members must pay self-employment taxes

Paperwork- more required than Sole proprietorship



Hope this helps, could've probably googled both subjects and found the same material, but figured I'd throw in what we just went over.
 
Get involved with your local SBA and SCORE, where you can get all your questions answered by people that are in the know and have done all of this before. Another thing Renny and other highly successful people recommend is to get several mentors. SCORE is great place for mentors as well as just looking at your life and the people you look up to and try to emulate. You need to surround yourself with like minded people going in the same direction you are going. With all the resources available these days there is no reason to guess. The forums are great but I would seek people near to you to get first hand help/experiences. Start at the SBA, SCORE, and your local municipalities to get the answers for your specific area. Don't be affraid to contact retailers in your immediate and near by areas. Most detailers would love to share their info with you and possibly give you a hand starting out. Another thing I do is talk to people I know and random strangers to findout what their take on detailing is and what would make them want to pay for services.
What demographic are you trying to reach? How many detailers and car washes are in your area? Gotta know your competition.
 
DBA and insurance is best way to go for now. aside from all the other jibberjab you have to straighten out, i.e. taxes, water reclamation (if your city regulates it), licenses to operate a car wash (if required), etc...

anywho, what year van is that and how much are you getting it for?
 
Thanks for the advice guys! I took a couple business and accounting classes in college but that was 10 years ago, lol.

ShaunD, thanks for the advice on SBA and SCORE

I'm pretty sure now I want to start off as a sole proprietor so it will be easier to start up and I can focus 100% on making my business successful.

I bought a 2006 GMC savana 2500. 96k mikes for 6k. It needs tires and fully detailed, but its a nice van. 1 owner and clean carfax.
 
No problem Scott. Wish I would have taken my own advice when starting my business.LOL But, at least I can share my mistakes and help people avoid them.
Yeah that van sounds like a great deal. Mobile billboard. :)
 
I have an LLC for another business that I operate. I filed an S-corp election also. This is the way to go. You will have to pay yourself a "reasonable" salary from the income that comes in. That salary will be W2 and you will have to do withholding for income tax and payroll taxes including state and federal unemployment. Beyond the salary, the rest of the income can be distributed as a "distribution" in which you will receive a K-1. For that portion, you only have to pay income tax and will not have to pay self-employment, payroll, or unemployment tax. Be sure to keep track of your distributions throughout the year and file income tax estimates so you don't get hit with a high tax bill and/or penalty at the end of the year when you file your return. Run all your business expenses through the LLC.

Caveat: I'm not an accountant, merely an LLC owner myself who runs his LLC under the guidance of a CPA.
 
LLC protect your personal assets.. no additional l tax benefits. Income from mine is done as personal income.

LLC is cheap easy and great protection if you have a big target on your but.

have to file a yearly report, online in Indiana and takes 1 minute and about $40
 
wdmaccord said:
I have an LLC for another business that I operate. I filed an S-corp election also. This is the way to go....
Click to expand...

This is what I do as well, per my accountant. I have 2 "side" businesses and both are LLC/S-corp (my detailing biz being one of them).

You don't need to register the vehicle in the business name. Just have your accountant (or yourself) claim it on your taxes as part of the business. You can then write off all biz vehicle expenses, maintenance, insurance, gas, etc...
 
You must log in or register to reply here.
Back
Top