.

[Gord Baker]

You might want to have a Limited or Incorporated Company which prevents people from suing you and taking your home.

 

[RolandW]

"The next reason to form a business is that, with a business, you can deduct the cost of materials, gasoline, oil, special clothing, advertising and about anything business related from your income at tax time."
Well of course you can. Who would be crazy enough to start a business if you were taxed on gross revenue instead of profit? I've never understood why people act as though "writing off" something means you don't have to pay for it.
Aside from that, great summary for the aspiring entrepreneur. We've all heard the truism "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime." But if that's all you teach the guy, he's still doomed to a miserable hand-to-mouth existence, a few bad fishing days away from starvation. If you really care about the man, teach him to think like a capitalist. Show him how to forego consumption so he can save and invest to expand his structure of production. Such is the path to prosperity.

 

[PGB1]

You might want to have a Limited or Incorporated Company which prevents people from suing you and taking your home.

It's great that in most states (if not all) you can have the advantages of Sole Proprietorship and LLC in the same business. In Michigan, you can even have an LLC S-Corporation.

LLC is great protection if the company has debts that it can not pay. Your own home, bank accounts, spouse's job pay can not be touched to pay the debt. (Example: Company buys a truck on credit for $20.000.00. Company can't pay. All the loan company can go after is the company's money and assets- not yours.)

Negligence gets complicated.
1) If one of your employees is negligent, your personal assets almost always are protected.
2) Usually, but not always, if you cause damage or injury without negligence, your personal assets are safe. Example: The mower explodes and hurts a bystander, but the mower was properly maintained. You're usually safe. The company will have to pay the judgement, but not your personal money.


But... If you the owner are negligent, the rules change- Drastically.

Here's an article that addresses when the owner of the LLC is negligent: https://www.nolo.com/legal-encyclopedia/limited-liability-protection-llcs-a-50-state-guide.html
Look at the paragraph titled "Personal Liability For Your Own Actions".

Below is an excerpt from the article. Note how all of the exceptions concern your own negligence or wrongdoing:
"There is one extremely significant exception to the limited liability provided by LLCs. This exception exists in all states. If you form an LLC, you will remain personally liable for any wrongdoing you commit during the course of your LLC business. For example, LLC owners can be held personally liable if they:

• personally and directly injure someone during the course of business due to their negligence
• fail to deposit taxes withheld from employees' wages
• intentionally do something fraudulent, illegal, or reckless during the course of business that causes harm to the company or to someone else, or
• treat the LLC as an extension of their personal affairs, rather than as a separate legal entity."

So, if you are carelessly run someone over with the mower and the civil judgement is for more than the company owns and is insured for, your own money, home and other assets may be used to satisfy the judgement.

 

[Gord Baker]

Above all else, get Public Liability Insurance and Incorporate. My advice is from experience running a business in Ontario Canada.

 

[PGB1]

"The next reason to form a business is that, with a business, you can deduct the cost of materials, gasoline, oil, special clothing, advertising and about anything business related from your income at tax time."
Well of course you can. Who would be crazy enough to start a business if you were taxed on gross revenue instead of profit? I've never understood why people act as though "writing off" something means you don't have to pay for it.
Aside from that, great summary for the aspiring entrepreneur. We've all heard the truism "Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime." But if that's all you teach the guy, he's still doomed to a miserable hand-to-mouth existence, a few bad fishing days away from starvation. If you really care about the man, teach him to think like a capitalist. Show him how to forego consumption so he can save and invest to expand his structure of production. Such is the path to prosperity.

Thanks RolandW for posting this.

Here's a great example of why having a real business and deducting is to your benefit:
In 2021 the vehicle costs (repairs, fuel, insurance, maintenance) for my business were $18,623.00.
I deducted them instead of taking the standard mileage deduction. At the 12% federal income tax bracket, that was $2,234.76 less federal tax that I had to pay. Adding the savings on Michigan income tax, I pocketed another 792.00.

My pocket was fatter by 3,026.76 from the vehicle deduction alone.


Allegedly "Smart" people who operate on cash-in-the-pocket are going to get caught sooner or later. The IRS or your state will eventually see a pattern of money going into the bank or bills being paid with not enough income to cover it. If you deposit 10,000.00 or more cash in the bank, it will be reported by federal law.
I've known more than one who was caught. The fines and interest are robust!

 

[PGB1]

Above all else, get Public Liability Insurance and Incorporate. My advice is from experience running a business in Ontario Canada.

In the U.S. we get the benefit of being able to have a Sole Proprietorship which saves the start-up (and ongoing) paperwork of incorporation. (Plus the IRS' deep scrutiny of S-Corps lately)

Amen x ten to Liability Insurance!!!

Paul

Disclaimer: My company is a Subchapter S Corporation with LLC protection. The only advantage to me is the Distribution rule allowance. Some years, that saving is not worth the time of the extra recordkeeping paperwork and outrageously complex S-Corp tax return & Schedule K-1 reporting.

 

[Hammermechanicman]

I am an LLC sole proprietorship. My $1M liability insurance is about $500 a year.
1 in 5 new businesses fail in their first year. Knowing how to run a lawn mowing business is more important than knowing how to mow grass. A good accountant is your best friend too

 

[Tiger Small Engine]

I am an LLC sole proprietorship. My $1M liability insurance is about $500 a year.
1 in 5 new businesses fail in their first year. Knowing how to run a lawn mowing business is more important than knowing how to mow grass. A good accountant is your best friend too

Go to “Lawnsite”, and read the hundreds of threads on starting a lawn care business. Good source for many questions you have.

Starting a mowing business with a beat up $1000 truck and an old riding mower is not going to get you far. Lawn care is very competitive and showing up with old equipment that will not be reliable will not be a selling point or work when you are trying to grind it out every day.

You will need cash reserves and have to live on very little the first few years before the profits improve.

If you think you can find a million dollar liability insurance for $300-$500 per year, I wish you luck. Sounds awfully cheap to me.

I mowed for 10 years on my own commercially. It is a relentless business and ain’t easy. Happy New Year!

 

[PGB1]

If you think you can find a million dollar liability insurance for $300-$500 per year, I wish you luck. Sounds awfully cheap to me.

Maybe try Selective Insurance Company. (selective.com) They insure in many states & were hundreds of dollars less expensive than the others for my business.

Hartford has fairly reasonable rates if you are over 50 years old and go through AARP. (TheHartford.com and AARP.org)

I have $18,000.000.00 liability coverage with zero deductible for $300.00 per year. This is with a high voltage electrical contracting business. I assume lawn care will be less expensive because the potential for damage and injury is less. Note, however, that we do not do any residential work. (No 13,200 volt houses) Perhaps my premiums are lower because of that.

Our coverage does not exclude working in Detroit or any of Wayne County, Michigan. Wayne County is the county with the highest tort case liability judgement dollar amounts in the Unites States. Insurance elsewhere, or with a Wayne County exclusion clause, should certainly be less expensive. (Health insurance, too. By quite a bit)

My Inland Marine coverage from Selective is also very inexpensive- even with working in Detroit.

 

[Hammermechanicman]

My policy is through Hartford. Since my shop is on my property I have a rider on the homeowner policy to cover building, tools and equipment. The Hartford is a liability policy. I think a lot of people start a business without knowing how to really run a business. The small business administration website is a good place to start. A side hustle is one thing but a real business is something else. A couple of people I know used their retirement savings to start businesses that failed. A sandwich shop and a bike shop.