Starting a Detailing Shop

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lps5053

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Hello Everyone!

I'm new to the forums but have visited this site many times to gain some knowledge about starting a detailing shop. My friend and I would like to open a stationary shop in our hometown. We already have two bays that we will be renting. What are the next steps? I've been looking at how to start small businesses online and have found some things but I still have questions.

I think we would like to open the shop as a General Partnership which means we have to file a fictitious name with the state of Pennsylvania. After that we will be looking into insurance.

My question is, do auto detailing shops that are just starting out normally go right for the LLC or is a GP okay? I know that an LLC has benefits as it seperates your work from personal life as far as people coming after your house, car and wealth. But for us as a business just starting out, would a GP be okay?

I guess I should also say that I will be graduating from Penn State in May with a communications degree and my partner is a marketing major so I think that after we figure out how to start, we will be okay.

Before I end this, is there any other precautions we should know about before taking this to the next step?

I appreciate any help you guys can supply!

Thanks!
-Lenny
 
I think you have your steps mixed up. You should have everything you need all planned out before you do anything. If you already rented a garage how do you know if you can afford the bays if you don't know how much insurance is? There is so much that goes into a business other than renting a place and hanging an OPEN sign.

Welcome to Autogeek.
 
'03 Ram 5.9 said:
some good info in here
http://www.autogeekonline.net/forum...ps-starting-part-time-detailing-business.html
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Thank you!

Pureshine said:
Here go to this link here on AGO will tell you everything you need to know.
Todd
http://www.autogeekonline.net/forum...rs/59832-setting-up-business-hoops-do-so.html
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Thank you!

rustytruck said:
I think you have your steps mixed up. You should have everything you need all planned out before you do anything. If you already rented a garage how do you know if you can afford the bays if you don't know how much insurance is? There is so much that goes into a business other than renting a place and hanging an OPEN sign.

Welcome to Autogeek.
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Well Rusty, we have not rented the garage yet. We have the ability to rent this garage because we know the owner. We are still in the planning stages and no money has been put into this yet which is why I'm here looking for advice! I've rushed into a lot of things in my lifetime and this is one that I want to make sure I know everything about before making a decision.
 
My questions more relate to the business aspect of things such as deciding to form a General partnership instead of an LLC.
 
I should also state that the garages we will be renting are in the same building as a used car lot. The used car lot is owned by a good friend and he gave us the opportunity to open a detail shop in the bays as he has no need for them. We will obviously be paying rent for our portion of the building. Will we need our own insurance?
 
Why not ask the owner if his insurance will cover liability damage in the two bays that you will be working in. Check with city hall for business license, check in with BBB, chamber of commerce etc to let them know you've arrived. Offer some specials to the groups to get business rolling. Conside a local mobile service to augment those that will not come to you. Good luck.
 
rmagnus said:
Why not ask the owner if his insurance will cover liability damage in the two bays that you will be working in. Check with city hall for business license, check in with BBB, chamber of commerce etc to let them know you've arrived. Offer some specials to the groups to get business rolling. Conside a local mobile service to augment those that will not come to you. Good luck.
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We are almost positive that his insurance will cover us. I'm just not familiar with just operating with a business license vs general partnership vs LLC. We'd like to keep it as easy as possible to start and if things take off then we can adapt accordingly.
 
lps5053 said:
We are almost positive that his insurance will cover us. I'm just not familiar with just operating with a business license vs general partnership vs LLC. We'd like to keep it as easy as possible to start and if things take off then we can adapt accordingly.
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It'd be nice to have your own garage keepers policy and liability even if there's a possibility that your friend's insurance would cover you. It could keep the grayhound tracks off of your back if something were to go wrong. It would also help you garner business with folks who ask whether or not you're covered while you have their vehicles. I'm mobile and it's ~$900/year for GC and liability with a $1000 deductible. It might be a good idea to get coverage for theft of your equipment because you'll probably end up with $5000+ even if you get used stuff like I did ($250/yr).

I *think* that an LLP and LLC can be treated as pass-thru for tax purposes. That would be the main thing that I'd look into - how it would be split for taxes. My LLC is pass thru since it's a one member gig.
 
rustytruck said:
I think you have your steps mixed up. You should have everything you need all planned out before you do anything. If you already rented a garage how do you know if you can afford the bays if you don't know how much insurance is? There is so much that goes into a business other than renting a place and hanging an OPEN sign.

Welcome to Autogeek.
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I have to agree you on this one Rusty, "alot of work" is an understatement though. If your serious about opening your own shop there are many things you need to do. The first and foremost I recommend this book How to Start a Home-based Car Detailing Business.
It will answer all the questions you have posted so far in this post. Especially the LLC and GP labeling. Next go to the local city hall and see what restrictions are if there are any.
Next, I'd have your friend draw up a lease for the garage so that way when you become established, your covered. Once you get the lease then I recommend bringing it to a lawyer to make sure that again, your covered. None of this is suggesting that you have a bad friendship, it's more to protect your business from the friendship. Sometimes friends and family don't always mix when a business is brought in the fold, so any precaution you can take to protecting both is worth the investment.
Before you start doing the lease, you need to know where you stand on insurance, I recommend getting your own so again to protect your business. Shop around for prices, thats the best way to get an idea of what it will cost in your area. This post has a good post at the end that may help you out Garage Keepers Insurance.
I'm going through the same process right now with my first full time shop so I can relate with you fully. But it's not the easiest thing to do so take your time and make sure you have all your bases covered before you take possession of the keys. Good Luck.
 
ProDetail said:
I have to agree you on this one Rusty, "alot of work" is an understatement though. If your serious about opening your own shop there are many things you need to do. The first and foremost I recommend this book How to Start a Home-based Car Detailing Business.
It will answer all the questions you have posted so far in this post. Especially the LLC and GP labeling. Next go to the local city hall and see what restrictions are if there are any.
Next, I'd have your friend draw up a lease for the garage so that way when you become established, your covered. Once you get the lease then I recommend bringing it to a lawyer to make sure that again, your covered. None of this is suggesting that you have a bad friendship, it's more to protect your business from the friendship. Sometimes friends and family don't always mix when a business is brought in the fold, so any precaution you can take to protecting both is worth the investment.
Before you start doing the lease, you need to know where you stand on insurance, I recommend getting your own so again to protect your business. Shop around for prices, thats the best way to get an idea of what it will cost in your area. This post has a good post at the end that may help you out Garage Keepers Insurance.
I'm going through the same process right now with my first full time shop so I can relate with you fully. But it's not the easiest thing to do so take your time and make sure you have all your bases covered before you take possession of the keys. Good Luck.
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I appreciate all the advice. I've actually read specifically that section of that book for information on the all the legal structures.

I'm 21 and so is my partner that I would be opening the shop with. We currently do not own our homes, but we do own our vehicles. I know that in the LLC you can keep your business separate from your personal belongings. I am going to call the township tomorrow to get more info but for now, given our circumstances of not having much that people could come after, would a GP make more sense than an LLC? Also, I know that the taxes have to be filed differently. Since my friend and I will be the only "employees" of the shop, can we each file them under our personal income tax in a GP but not an LLC? Do you need an accountant for an LLC?

I appreciate any and all input!
 
No, with a general partnership or llc your going to have to file one for each of you, and the business. For a definite answer you may have to contact a lawyer. I'm sole owner so I file my own taxes and a seperate tax for the business.
 
ProDetail said:
No, with a general partnership or llc your going to have to file one for each of you, and the business. For a definite answer you may have to contact a lawyer. I'm sole owner so I file my own taxes and a seperate tax for the business.
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I must have misread then! Obviously we each would file our own but I didn't know if the business was included with that. Guess it really doesn't make sense that it would be. If you don't mind me asking, do you file your taxes for your business yourself or do you have an accountant?
 
The "friends" insurance thing does not sound legal to me. Your friend would insure his business needs. You would be responsible to insure your business. I am mobile and my insurance is about $900yr. Your insurance would be more because you would need to insure the space you are leasing. A customer can always call and get a form(forgot what it is called) to verify you are insured and what your coverages are. I don't think some would drop off their new Ferrari to be coated if the best you could offer is "don't worry my friends insurance will probably cover it"

I'm not familiar with partnerships, but no you do not need an LLC I'm a sole proprietor makes things easy for taxes.
 
I'm one of the few lucky ones that has an accountant in the family. My aunt owns her own company and she logs on to my quikbooks remotely and takes care of it for me. She also creates my w2 for myself in regards to my company, and I give her my full time jobs w2. Which all changes considering I'm going full time in my own shop in April.

The whole reason of a Corporation affiliation is to separate your business expenses from your personal property, expenses, etc. So filing the taxes separately to me would just make sense.
 
rustytruck said:
The "friends" insurance thing does not sound legal to me. Your friend would insure his business needs. You would be responsible to insure your business. I am mobile and my insurance is about $900yr. Your insurance would be more because you would need to insure the space you are leasing. A customer can always call and get a form(forgot what it is called) to verify you are insured and what your coverages are. I don't think some would drop off their new Ferrari to be coated if the best you could offer is "don't worry my friends insurance will probably cover it"

I'm not familiar with partnerships, but no you do not need an LLC I'm a sole proprietor makes things easy for taxes.
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We will definitely look into garage keepers insurance. It does make a lot of sense that just because were in the same building doesn't mean that each business is insured just because they are both in the building. Is there anyone you would recommend to use for garage keepers insurance?

ProDetail said:
I'm one of the few lucky ones that has an accountant in the family. My aunt owns her own company and she logs on to my quikbooks remotely and takes care of it for me. She also creates my w2 for myself in regards to my company, and I give her my full time jobs w2. Which all changes considering I'm going full time in my own shop in April.

The whole reason of a Corporation affiliation is to separate your business expenses from your personal property, expenses, etc. So filing the taxes separately to me would just make sense.
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You are definitely lucky to have an accountant in the family! Thank you very much for all of your knowledge.
 
ProDetail said:
No, with a general partnership or llc your going to have to file one for each of you, and the business. For a definite answer you may have to contact a lawyer. I'm sole owner so I file my own taxes and a seperate tax for the business.
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Why are you filing two separate taxes are you an sole proprietorship LLC? If you are you don't need to file separate I have been file one tax return for years.
 
As for insurance I have an Auto Services Policy. It covers customers cars,tools and shop for $30 a month. It covers up to 1,000,000 in damage to anyones car and cover if a customers falls and hearts them self in my shop.Garage keeper doesn't cover everything.
Todd
 
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Pureshine said:
Why are you filing two separate taxes are you an sole proprietorship LLC? If you are you don't need to file separate I have been file one tax return for years.
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Because I pay myself hourly, the profits my company makes are then saved and reinvested back into the company. It started because it was what my accountant(aunt) recommended when I brought my business on the books. It works so I continue to do so. How do you keep the business finances separate from the yours if your filing it together? To me that would just defeat the reason of setting up a llc.
 
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