We did it! Started our own business!

Congrats, on your new biz. Dh is working over a side biz in his head and one day we will have it, I'm quite sure. Your situation is exactly how we found the business to cut down our trees, who were so tall that they were leaning to the road, threatening to topple on someone's house. The imagined lawsuit was well worth the $350 we paid to have them cut and the wood left in the yard for our disposal. His "day job" was the trash man. I live in a small town with no trash removal, we have to pay to have it removed or take it to the dump(free). With 2 then very small children it was just easier to have it removed. Then one day he knocked on the door and told me he'd take out my trees before they fell over, and made arrangements to come back when my dh was home. They were quick and clean and didn't horse around, and for that we gave our family several referals. They were pleased as well. This might be a good weekend thing for you at first, just be sure to follow all the legalities of it and you will be fine.

Another question: can't you take off your taxes money spent on classes to help run the biz correctly? Like some business or accounting classes, just like you could office supplies, uniforms, protective shoes? My dh's "day job" requires his own tools, clothes, steel toed boots, union dues, etc and he's allowed to deduct all of these(including milage). How about deducting the amount you spent for a computer and such for book keeping purposes?

Hi All
You will notice that not one person disageed about partnerships.
If you do not enough money to pay all the exspenses of the complete business. DON'T go into a partnership. I did ended up paying for my farm twice. The was with a brother. I would NOT go into a partnership ever again.
Ken in Minn

Although I'm not familiar with U.S. business practises... you may want to consider "Incorporating". Your lawyer will be able to advise you on the advantages of such a move. It may mean that your personal posessions (house, car, etc.) are protected and isolated from any business activities.

Partnership... I wouldn't. Too complicated and too much risk. Two business people going into a partnership is much different than two people going into a new business together (with no experience).

cheers and the very best for your new venture,

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Cheers from Southern Ontario CANADA!

Congrats!

No legal advice, but an "atta girl" for seeing a lawyer and accountant. Even when folks get along well, honest disagreements can arise when things aren't spelled out, leading to hurt feelings and even lawsuits. Professionals can explain the ins and outs of various types of business relationships. Generally speaking, where liability is a potential issue, a sole proprietorship is not the best route . . . but the professionals can help you on that as well as what monthly/quarterly payments (if any) need to be made and what is and is not deductible.

Good luck!!!!

I'm still confused on a sole proprietorship. Would that be where, say DH, was legally the owner and our "partner" was his employee?
Heather

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Hospitality consists of a little fire, a little food, and an immense quiet. - Ralph Waldo Emerson

I regret you have made the biggest business blunder you could by working for less than the currant rate. If you continue to under bit hundreds of dollars on each job you are hurting yourself, causeing ill will among compeditors, they will find a way to strike back. Plus, why do the job and not recieve the profits? A rule of thumb for bidding is, first;
1. Time, your hourly wages; exspences, your cost to operate, fuel, vehicle insurance, replacement of broken tools, ect.

2. 20% additional for taxes.

3. 20% additional for misc, unseen exspences; flat tires, broke transmissions, who knows what will happen.

4. 20% additional for profit above and beyond your wages/ future growth, ect.

Any lessor amount is not adequate for a business to survive.

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If you can read this - thank a teacher. If you can read this in English - thank a veteran.

Never mistake kindness for weakness.

I'm still confused on a sole proprietorship. Would that be where, say DH, was legally the owner and our "partner" was his employee?

I am going to a small business workshop that the IRS is holding in my area in March, so hopefully they will clear up alot of my questions. But I'm really the kind of person who likes to know what they are getting into before I do something. Honestly, it doesn't look like I thought of everything before we did this business, but thanks to the generous help of everyone here maybe we won't be a total failure lol. Least we're in the first stage (getting the business license) and have a full year before we have to file federal taxes. The County Clerk's office explained the semi-annual county taxes we'll have to pay and it doesn't sound like being a partnership or sole proprietorship or corporation would change those (I could very well be wrong here). Will I need to change the business license if we change our status from partnership to something else? Hhhhmmm...
Heather

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Hospitality consists of a little fire, a little food, and an immense quiet. - Ralph Waldo Emerson

Where we live there is no currant rate....it's all controlled by one company. I agree with your percentages you listed, but I may not have explained our situation very well when I said we have under bid the other company by hundreds of dollars, so please let me do so now. The ONLY other competition we have is a VERY large, nationally owned company who charges outrageous fees for their work because they can. People have either had to use them or do it themselves. By using the percentages you listed above, we have been able to underbid them because we don't have near the expenses they do to operate or the salaries to pay like they do. They'll bid $2000 to take down two trees and remove them. That's ridiculous! Dh and I did this same job last spring and summer, as a side job, and got so busy he never had a day off for 6 months or so. People are willing to pay to have the work done, but not by highway robbery. When one company has control of a service in a 4 county area, along with all the national parks and camping grounds within that area, they can pretty much charge what they want. The work is here....and plenty of it. Somebody had to give this other company some competition....and that's us.
Heather

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Hospitality consists of a little fire, a little food, and an immense quiet. - Ralph Waldo Emerson

A sole proprietor is a single person who owns the business. A partnership is where two people each legally own it.

Having employees means you must have worker's compensation insurance (to pay your employee if they are injured). It is very expensive. You also have to pay all the withholding taxes, etc.

I am wondering how you could even bid on any jobs without having your insurance yet. Insurance is usually a big cost and without knowing how much it is, how can you know if your bids are economical?

The same thing goes for taxes, without understanding the tax implications, how can you tell if your bids are economical? Do you understand how Self-employment tax works? Can you estimate how much you will have to pay?

I don't mean to sound discouraging, but this is the type of homework that should be completed before starting the business. I would go to a CPA to learn what the tax implications are. Bring last year's taxes with you, because how it will effect you depends on your personal tax situation.

Take your friend to the lawyer and sit down and figure out exactly what your argreement is. Who owns the equipment? If he wants you do all the books, how does he want to be paid? How are you going to determine who gets paid what? Split the job, by the hour? Does he expect you to submit to him a report monthly (I would)? Who determines if an expense is worth paying? If he fills the truck with gas and bring you a receipt, does he expect you to hand over the cash? All those questions and more.

Then find out what your insurance will be based on your arrangement.

Then, with an understanding of your major expenses (labor, insurance, taxes), you will be in a position to actually bid on jobs.

Good luck

Jena

I should probably add here that our partner used to work for this other large company. They paid for him to go to the professional tree school, or whatever they called it. He knows the ins and the outs, tricks of the trade, how they bid a job and why, etc. DH did this same work the entire time he was growing up for the orchards in WA state, so he and our partner compliment each other very well is the skills and knowledge that they have combined. Just wanted to clarify that we're not a couple of people who decided to start a tree service and didn't know anything about the job or didn't have any experience.
Heather

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Hospitality consists of a little fire, a little food, and an immense quiet. - Ralph Waldo Emerson

............Heather , Look into setting up your business as a SUB-"S". corporation.It has the best features of a sole proprietorship. It has the allocating of expenses between partners like a P-ship and it has the "limited liability" facet of being Incorporated . I know your confused at this point and ready to get this business "Going" given the Fact that you have had such a strong response from your advertising as abusiness.
............The main thing as far as insurance is concerned is to acquire a general Liability policy to protect you from damage to structures and lawsuits.
............Just Don't organize your business as a Partnership. It is a smart move to seek professional help.....But, Lawyers and CPA's are NOT the Sole Repositories of All knowledge as it relates to setting up a business and keeping it going in a competitive environment. There are very Smart and knowledgeable people who are JUST as competent as the people with a Shingle on their Door and they charge LESS and you still acquire the advise you need and save money to boot.
.............I think that you have realized that setting up a BIZZ is more involved than you first realized. But , you are being very open minded Before you step into the cement of Declaring a Formal Bus. Model. This attitude will serve you well and help you to make the Decisions that will suit your needs down the Road........fordy...

fordy: Thank you for those words of encouragement. And your right...I am realizing there is more paperwork and stuff than I originally thought, but I'm trying to keep a positive mindset that all this *stuff* isn't stuff that can't be overcome with the help of all the wonderful people here, as well as the professionals I have/will contact.

I've checked into liability insurance and will be getting that next week. I don't have to have insurance to place a bid, and don't HAVE to have it to do the job, but I've told our customers that we WILL NOT do the job unless we have active insurance and they've been very understanding. We didn't expect for the phone to start ringing for a couple months since it's the dead of winter here...just wanted to get our name out there for a couple months before the spring clean up starts around here. But everyone has said that they refuse to pay what the other company is charging, and eventhough we don't have insurance yet (I found out what it will cost so can plan accordingly), they have all wanted bids and to be "booked" into our schedule. We have several BIG jobs from last summer that still have to be done also, but the owners wanted to wait until this spring to complete the job (wives were griping they were spending to much money as it was lol). So it looks like it's going to be a very busy year....

Heather

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Hospitality consists of a little fire, a little food, and an immense quiet. - Ralph Waldo Emerson

Incorporating as a "S" or limited liabilility corporation can be done for less than $600 and a liability bond policy to insure you against employee negligence can be secured for as little as $4000 a year, which is in the same range as many individual health insurance. Liability coverage is a very important feature in todays small business world. Keep in mind that overhead costs are tax deductable so the expenses serve you in more than one way.

I found it helpful joining the National Federation of Independent Businesses lobbying group . The yearly dues paid for themselves through information and group rate status that was provided by the organization.

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"I didn't have time to slay the dragon. It's on my To Do list!"

Being a top quality professional in any kind of career is a great thing.

But going into business is a whole totally different type of career by it's self.

Hundreds of thousands of business start ever year, and only a hand full are ever successful.

No matter what kind of business you are in, someone has to be the Boss, with the final say in all areas, no exceptions.

No company will ever run properly with TWO HEADS, not even a partnership.

Splitting the profits 50/50 is good, if you are equal parteners.

Bill Gates, Donald Trump, and others just like them listen to all of the people under them on advice for the business, but answer to no one in their business.
They make the final decisions as head.

Your husband and his friend should decide who is going to be the Head of the company, and put it in writing.
You can not have two or more people pulling in more than one direction !

Everyone has a say but the President has the final say, even in a partnership !

This type of problem will arise in all business.
Even in a marriage, but that is a different type of partnership ! ! !

This happens no matter who you go into bussiness with ! ! !

Put everything in writing and have a Lawer who knows and understands bussiness, and a good insurance co. to cover everything ! ! !

Sound like you all could be a good competitor.
Hope and pray it all works out for the good ! ! !