# Starting right, the FIRST time..



## gb-const (Nov 16, 2014)

Hello everyone,

First off, thank you for taking a few minutes to stop by and read. Thanks in advance for advice and suggestions.

For what it may apply to, I am located in the State of Texas. My father and I work in the same company at the moment, and are looking to start our own contracting business, mainly in concrete work and excavation. 

I am thinking to go with LLC structured business, as it would seem to be not so complicated (for starters), and would (hopefully) provide the added coverage as compared to Sole-Proprietor/DBA, in coverage and tax purposes. What are your thoughts on this? Additionally, we are thinking, if successful--operating under an "umbrella" LLC, and having multiple businesses under different names (DBA). 

Next, for filing for the business entities, I am considering to use LegalZoom for the basic plan. Since the EIN and Sales Tax paperwork it free to apply through my State's website, I can do this myself. BUT, should I speak to an Attorney first, and take them on as my business Attorney, and have him/her file for me? What is something you did when starting out, or wish you had done differently?

Now, on to employees. Being as our business will deal with concrete, and to have a decent project completion time, we would be looking to take on 2-5 additional employees, aside from my Father and I (both being Managing-Members). How do the majority of you manage Payroll, Accounts Rec/Payable, etc?? I was thinking to use QuickBooks for the early-stages of the business, and shoot from there.

I may have some more questions later on, so thank you for your patience and response.

-Steven


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## tedanderson (May 19, 2010)

Everything you are thinking about is good but the first thing that I would focus on is having all of the necessary insurances, bonding, and licensing. 

I personally like operating under a DBA to manage anonymous complaints and frivolous lawsuits. That way the people who actually do business with me know how to find me if they have a problem. Anyone else who goes after me as a matter of mistaken identity or looking for an easy payday, it's going to take some work to locate the proprietor (me). By that time I know who they are and I can check my records to see if they were actually a customer of mine or not.


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## mikeswoods (Oct 11, 2008)

Before you speak to an attourny --I would speak to a good accountant.

The accountant will guide you to the best choice,tax wise, to structure the business--
The accountant will also know how to handle the employee taxes and workmans comp.

If you choose well--they will also know of insurance companies,lawyers and other resources.

Just a thought-----


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## Spencer (Jul 6, 2005)

Good call of starting out as an LLC. I didn't my first year and its going to cost me quite a bit of extra coin to the tax man. 

If you form an LLC. The best option for me is to form an LLC and file as an S-Corp. This allows you to have the tax advantage of an S-Corp with the annoying extra paperwork of a formal S-Corp.

By going the LLC/Scorp route you can pay yourself a "normal" salary and then pay yourself a distribution at the end of the year that is not taxed FICA and maybe some other stuff. It saves a good 10% that doesn't have to go to the tax man.

I've got a meeting on Monday to start looking into getting mine setup for the coming year.


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## Spencer (Jul 6, 2005)

gb-const said:


> Now, on to employees. Being as our business will deal with concrete, and to have a decent project completion time, we would be looking to take on 2-5 additional employees, aside from my Father and I (both being Managing-Members). How do the majority of you manage Payroll, Accounts Rec/Payable, etc?? I was thinking to use QuickBooks for the early-stages of the business, and shoot from there.
> 
> 
> 
> -Steven


Quickbooks has been huge to running my business successfuly. I can not say enough about it. I use quickbooks pro. 

The other part of quickbooks is getting it setup right before you start plugging numbers in. You will probably want to have an accountant set yours up. I bought a template online from a guy who was a former contractor turned accountant. It was worth every penny and it has helped tremendously. There is a learning curve but once you get it down it is extremely valuable.

Cost is $150 for the template.

http://www.powertoolssoftware.com/index.html


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## JBM (Mar 31, 2011)

We use a payroll company and would never be without it. It integrates into quickbooks. Down south employee leasing is popular I think, it simply adds comp to your payroll but you pay the company the entire amount.


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## gb-const (Nov 16, 2014)

tedanderson said:


> Everything you are thinking about is good but the first thing that I would focus on is having all of the necessary insurances, bonding, and licensing.
> 
> I personally like operating under a DBA to manage anonymous complaints and frivolous lawsuits. That way the people who actually do business with me know how to find me if they have a problem. Anyone else who goes after me as a matter of mistaken identity or looking for an easy payday, it's going to take some work to locate the proprietor (me). By that time I know who they are and I can check my records to see if they were actually a customer of mine or not.


This was exactly my thinking. Going the LLc route, electing to be taxed as an S-Corp. I wouldn't want to be in a HIGH tax-bracket as a Sole-Proprietor, and the idea of double-taxation of a C-Corp doesn't appeal to me. 


mikeswoods said:


> Before you speak to an attourny --I would speak to a good accountant.
> 
> The accountant will guide you to the best choice,tax wise, to structure the business--
> The accountant will also know how to handle the employee taxes and workmans comp.
> ...


Right on. How do most of you find your accountant? Do you take them on to the Business, or just a 3rd Party resource?


Thank you.


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## mikeswoods (Oct 11, 2008)

Unless you really like book keeping---the small monthly charges are usually less that the cost of the mistakes you might make---

Do you know any small businesses? A local store or some such? Have a chat with the owner--ask who he knows---if you join an association,like the chamber of commerce or a builders group like NARI the members will have numerous recommendations.


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## gb-const (Nov 16, 2014)

JBM said:


> We use a payroll company and would never be without it. It integrates into quickbooks. Down south employee leasing is popular I think, it simply adds comp to your payroll but you pay the company the entire amount.


I had been looking to do something similar, although, a secondary entity which would "handle" my assets and the like. What is the added benefit, other than extra paperwork, for "leasing" employees? I am curious now.



mikeswoods said:


> Before you speak to an attourny --I would speak to a good accountant.
> 
> The accountant will guide you to the best choice,tax wise, to structure the business--
> The accountant will also know how to handle the employee taxes and workmans comp.
> ...


Will do, I now have a meeting scheduled with a firm tomorrow afternoon. I will post my findings.



Spencer said:


> Quickbooks has been huge to running my business successfuly. I can not say enough about it. I use quickbooks pro.
> 
> The other part of quickbooks is getting it setup right before you start plugging numbers in. You will probably want to have an accountant set yours up. I bought a template online from a guy who was a former contractor turned accountant. It was worth every penny and it has helped tremendously. There is a learning curve but once you get it down it is extremely valuable.
> 
> ...


Do you have an accountant who has access to your information online? I have no experience with QB, so I don't know what to expect, but I do expect to be able to handle my invoices and manage finances.. or at least try to get it right. I don't know the first thing when it comes to dealing with business taxes, all I know is what I have read.


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## JBM (Mar 31, 2011)

gb-const said:


> I had been looking to do something similar, although, a secondary entity which would "handle" my assets and the like. What is the added benefit, other than extra paperwork, for "leasing" employees? I am curious now.



We used it just for an inclusive way to run the comp. and payroll, for the year the comp. was 35k and we didnt ever want to get into a pickle with it.


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## gb-const (Nov 16, 2014)

mikeswoods said:


> Unless you really like book keeping---the small monthly charges are usually less that the cost of the mistakes you might make---
> 
> Do you know any small businesses? A local store or some such? Have a chat with the owner--ask who he knows---if you join an association,like the chamber of commerce or a builders group like NARI the members will have numerous recommendations.


I spoke with the CPA from my employer, he's also a good friend of my father. I asked if he could recommend someone, unfortunately, he could not and gave me the same response--to speak to another small business owner I may know, and see if they can recommend anyone. He's an old-timer, very, and has been with my employer since they've started in '84..so I don't blame him, however, I would expect someone in any profession to be active in some association.:blink:


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## gb-const (Nov 16, 2014)

JBM said:


> We used it just for an inclusive way to run the comp. and payroll, for the year the comp. was 35k and we didnt ever want to get into a pickle with it.


I'm having a hard time understanding this..


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## gb-const (Nov 16, 2014)

I spoke with an accountant today, just got back actually.. seemed easy, but no solid recommendations except an explanation of their services.


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## rselectric1 (Sep 20, 2009)

I do all my daily entries daily, but I have both a CPA that files my yearly personal and corporate returns, and also a bookkeeper who does quarterlies and handles issues much less expensively than the CPA.

For the last 5 years, they have played nicely together.

For the set up, I would suggest finding (but first interviewing) a Quick Books Advisor. It's very important to set QB up correctly the first time.

http://proadvisor.intuit.com/find-a-proadvisor/search.jsp

Mine was a referral, and he's done fine so far. He can go online every month and remotely access my QB and file the necessary paperwork too.

Best of luck in your new endeavor.


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## JBM (Mar 31, 2011)

gb-const said:


> I'm having a hard time understanding this..


If you pay comp on actual man hours worked everything is even every week without the surprises at the end of the year.


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## gb-const (Nov 16, 2014)

Any recommendations on Insurance? For both GL and WC, and anything else I might need. I will be literally starting from scratch, personal funds courtesy of my father and I.


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## gb-const (Nov 16, 2014)

What is everyone's opinion on filing/forming the Business (LLC) before the end of the year? However, I don't plan to, but I definitely could, generate any business before the New Year..

Would just like to have everything in-line, ready to start bidding after the New Year without having to wait for document filings..


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## Moxley-Kidwell (Jan 28, 2011)

gb-const said:


> What is everyone's opinion on filing/forming the Business (LLC) before the end of the year? However, I don't plan to, but I definitely could, generate any business before the New Year..
> 
> Would just like to have everything in-line, ready to start bidding after the New Year without having to wait for document filings..


Unless you have work waiting to start now I would just wait til 2015. If you start now you'll end up having to file for 2014 even if you did nothing. Have everything lined up to start Jan. 1st. 

QB should do pretty much anything you will need. There is a small learning curve, but if you have decent computer skills it won't be a problem. Only thing I don't do in qb's is payroll, either the wife or we pay a friend who can use a few extra bucks do it. We also pay a CPA firm to do our year end taxes and financial statement, they come out for a day to collect all the info and go over everything. We also have a way they can login to our QB to look or help with anything.

Good luck!


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## rselectric1 (Sep 20, 2009)

Moxley-Kidwell said:


> Unless you have work waiting to start now I would just wait til 2015. If you start now you'll end up having to file for 2014 even if you did nothing. Have everything lined up to start Jan. 1st.
> 
> Good luck!


Great advice. With about 6 other businesses under my belt that have been started and sold over the last 30 years (not related to what I do now) this is what I did as well.

I "opened" my current business a long time ago on a January 1 for this exact reason.


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## gb-const (Nov 16, 2014)

Moxley-Kidwell said:


> Unless you have work waiting to start now I would just wait til 2015. If you start now you'll end up having to file for 2014 even if you did nothing. Have everything lined up to start Jan. 1st.
> 
> QB should do pretty much anything you will need. There is a small learning curve, but if you have decent computer skills it won't be a problem. Only thing I don't do in qb's is payroll, either the wife or we pay a friend who can use a few extra bucks do it. We also pay a CPA firm to do our year end taxes and financial statement, they come out for a day to collect all the info and go over everything. We also have a way they can login to our QB to look or help with anything.
> 
> Good luck!


At this point in time, I have no work lined up. I will need to do some looking around, maybe sign up on a few builders exchanges online..something. 

I know where the first bucks of my business credit cards are going.


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## GovtContractor (Dec 4, 2014)

*Just getting started*

I applaud you for taking this step forward to owning and operating a construction company. I cannot speak for the legal loopholes or requirements in your state, since my knowledge is in the California requirements. 

I do offer a few suggestions though. 1) Speak with an attorney to ensure that the DBAs operating under the umbrella LLC will be protected at the same level as the LLC. In the corporate world this would be similar to piercing the corporate veil. 2) speak with a CPA, your bank, potential creditors, and suppliers to ensure that there will be no problems with operating multiple DBAs and somehow keeping the accounts payable and accounts receivable separated without a ton of bookkeeping. Is there even a reason to operate multiple DBAs? 3) when selecting a CPA, use a construction CPA. In accounting, generally, businesses operate off of either cash or accrual basis, but construction companies should operate off of percentage of completion. 4) Unless you're doing government work, Doing prevailing wage jobs, handling fringe benefits, or doing certified payroll reporting, I highly suggest outsourcing your payroll to a payroll processing company. They can also establish your workers comp policy,Pay your payroll taxes, file your forms, issue W-2s, etc. and they can do it cheaper and better than most of us. Hope this helps. Good luck.


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## peebuck (Dec 22, 2014)

@ gb-const.

I am set up as an S-corp from a previous venture and found out when I went to get Workmens Comp ins. that I as the owner of the company even though I would be working I would not be covered under workmens comp policy. I am under the impression that I need to be incorporated differently to be included under the policy (I am still researching). This is in New York state, I am also finding that due to the fact that my business has no previous experience I am only able to get Workmens Comp form the New York State Insurance Fund (13-15k a year for a policy with a pay roll of about 12k). Witch is a sate run non profit. Look into your workmens comp options before you decide how to incorporate yourself. Weigh your options then incorporate so you dont have to make changes later. We are kinda in the same boat at the moment trying to get set up correctly.


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## kiteman (Apr 18, 2012)

My understanding is being a corporate officer, S or C-corp gives you the option to opt out, not that you're not covered. Is that right? 15k for 12k payroll? That can't be right. 50-100k payroll I could see.


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## NYgutterguy (Mar 3, 2014)

My brother and I are both exempt from wc being officers but my employee is covered and it runs about 6,000 dollars per year and he makes about 700 per week. Your numbers are off


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## Mr Knucklehead (May 31, 2014)

NYGUTTERGUY said:


> My brother and I are both exempt from wc being officers but my employee is covered and it runs about 6,000 dollars per year and he makes about 700 per week. Your numbers are off



Sounds like you're about what I pay, about 18% NYSIF. Peebuck either has his numbers wrong or he's a bridge worker.


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## peebuck (Dec 22, 2014)

@ Mr.Knucklehead and NYgutterguy. Do either of you guys work in NYC or the borrows? Im alos a new company in this industry so they bend me over for the first few years.


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## peebuck (Dec 22, 2014)

Im shopping for INS at the moment Im having a rough time with my NYSIF rep he's a real goon has me down as a mason on the paper work and wont change it. He said the policy will be reviewed in 90 days and changes will be made then. A mason has a higher premium then what i do witch is pretty much considered HVAC. IF you guys have any experience to share im all ears I have not sgined anything yet


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## txgencon (Jan 4, 2011)

In a lot of cases, insurance rates are experience-rated. In the beginning, the think you're automatically in the high risk group. After a couple of years, assuming all goes well, rates may be reduced. If not, shop around.


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## NYgutterguy (Mar 3, 2014)

peebuck said:


> @ Mr.Knucklehead and NYgutterguy. Do either of you guys work in NYC or the borrows? Im alos a new company in this industry so they bend me over for the first few years.



No I work about 40 min north of NYC. Never go into city for work They may bend you over but those numbers just don't sound possible. Nobody would ever be able to afford to start a business paying over 100% for comp.


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## peebuck (Dec 22, 2014)

@ Nygutterguy doing work in NYC and the borrows raises your cost of ins. its a highrisk area as well as working on buildings over three stories adds to premiums and I install fireplaces so I am literally playing with fire. **** aint cheep it just gets passed on to the customer at the end of the day


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## NYgutterguy (Mar 3, 2014)

(13-15k a year for a policy with a pay roll of about 12k)....Did you mean $120,000? Might explain a few things. $12,000 a year payroll is like $4 dollars an hour..


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