We did it! Started our own business!

Discussion in 'Homesteading Questions' started by blhmabbott, Jan 30, 2004.

  1. blhmabbott

    blhmabbott We're gettin' there!

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    Well, we're legit. I went and got the business license on Monday :D . We are now the proud owners of B & T Tree Service. We went partners with a very good friend of ours who also has professional tree service experience. We placed our ad the beginning of January to get our name out there for this spring when everyone around here gets busy with spring clean up. The phone started ringing the day after the add came out and hasn't stopped since! We're having to schedule people for the weekends because both hubby and partner work a full time day job, but if this keeps up that won't last for long. There is only one other tree service around here, and they are a pretty big company, so we have been able to undercut each of their bids by several hundred dollars hehehe. Now if the stupid insurance company would ever return my phone call, or at least pick up the phone for the numerous times I've called, then we can get our insurance and start getting these jobs done! Just wanted to share the good news!
    Heather

    P.S. Does anyone here who owns their own business do their own taxes? I've spent alot of time this week on the IRS's webpage reading all the publications and forms for this and it seems overwhelming. I'm thinking about letting a professional do our taxes the first year and copy what they do for the following years. Or would you suggest letting a professional do them every year?
     
  2. Alice In TX/MO

    Alice In TX/MO More dharma, less drama. Supporter

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    Unless you REALLY like numbers and doing tax research, let the professionals do your taxes. The law changes so often that copying what they do this year may not be a good idea.
     

  3. CountryBound

    CountryBound Member

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    Congradulations, I'll see if my wife can get with you soon. We have been self-employed for 21 yrs. first in a small 2 person lawn and garden sales and service and then for 12 yrs. as a dinner owner with 15 employees and she has always done our taxes. She is only 2 credits away from a degree(marrige and kids halted that).Jeff
     
  4. blhmabbott

    blhmabbott We're gettin' there!

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    Jeff, thank you for the offer. I would enjoy talking to her if she has the time. No hurry though, because I won't need to file taxes until next year.

    Rose, yes I do like doing research and I'm good with numbers, but I'm afraid I wont' have the time to do everything that is necessary to do an accurate job. If they are as easy as Jeff makes them sound, then maybe it won't be so bad :) . Guess I'll have to wait and see.

    Thank you for your comments!
    Heather
     
  5. bumpus

    bumpus Well-Known Member

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    Check with more than one insurance company their prices
    and coverage differ greatly.
     
  6. ajoys

    ajoys Well-Known Member

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    Congratulations!!!

    My one piece of advice since you are in a partnership.

    Make sure you have a written agreement/contract spelling everything out between the two partners. The more detailed the better. If you haven't, do it. You might be able to find some sample contracts either on-line or at stationary/office stores. Then take it to a lawyer and spend the money on a couple hours of his time.

    I have seen so many businesses turn into huge law suits a few years down the road when the business starts to make money and one partner either spends all the money or tries to steal the business from the other. It happens everyday.

    What if 5 years from now you have 3 crews with trucks and everything and your partner starts to steal money and locks you out of the business and then says you guys had an agreement that said this was all OK. Don't risk your future. This is a business partnership, be smart about it and don't let your guard down because of your friendship with your partner.

    I would also pay an accountant, it protects both partners by keeping everything honest by having a third party going over the books. If your partner did the books how would you know he wasn't stealing from you?

    Partnerships can be very beneficial by pulling resources together but it is more work to keep everything together.

    Good luck! I hope you make a ton of money.


     
  7. Mike in Pa

    Mike in Pa Well-Known Member

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    Hey, I remember you. Your husband is the butcher. Too bad you aren't starting the business in my area.
     
  8. blhmabbott

    blhmabbott We're gettin' there!

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    bumpus: Excellent piece of advice, thank you. I took your advice and I'm calling around now to the many, many insurance companies we have here. I'm finding that not all of them cover a business such as ours. I also found a number for NASE (National Association for the Self-Employed) so will give them a call to see if they can beat any of our local insurance quotes.

    ajoys: You offer excellent advice as well. Though I can't foresee a situation like you mentioned happening, I guess nobody really does. It's the old adage of CYA lol. I will also look into accountants and hopefully will be able to find one that isn't a crook. Our partner said he doesn't want anything to do with the money part of it because he's lousy at managing it. So I'm in charge of collecting the money and managing it, but I think it is an excellent idea to at least look into the possiblity of hiring an accountant, as well as having a lawyer draw up a contract. Thanks for the heads up!
    Heather
     
  9. Shrek

    Shrek Singletree Moderator Staff Member Supporter

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    NEVER do your own business taxes. Keep a line item , color coded ledger with summary page and hire a good local tax accountant. The yearly cost of $100 is well worth the service. After all your going to be busy enough filing the monthly local sales tax and quarterly federal income tax payments in addition to running the business.
     
  10. blhmabbott

    blhmabbott We're gettin' there!

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    Mike: Yes, my husband is a man of many talents :p . Remember the movie "The Butcher's Wife"? That's me....

    He was looking into buying a meat processing shop (to small to be called a plant) where they do custom cut butchering. He passed on the deal at the time because he didn't feel like it was the right time to pursue that idea. Now they are trying to hiring him for a meazely (sp?) salary to run the place for the new owner who bought it who doesn't know his "***" from a hole in the ground. Hubby laughed at him and said "I won't run it. But I'll buy it from you and run it like it should be run!" :haha: That didn't go over to well :p .
    Heather
     
  11. blhmabbott

    blhmabbott We're gettin' there!

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    Shrek: What questions would you recommend I ask the CPA's when I call them? I just don't want to pick one out of the book and hire them do I (not my style...I want to know they know what they're doing)? We have several different CPA's here, and some advertise they do taxes. I guess that means they dont' ALL do taxes....just bookkeeping?
    Heather
     
  12. fordy

    fordy Well-Known Member

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    Being an old bookkeeper.....I'll give you some free advise...(1) Learn how to KEEP your own set of Books....A CPA will charge you $$$$ when in realty any average person can setup a simple set of books on paper. Setup your worksheets on paper before trying to put everything onto acomputer. When you do your record keeping on paper its alot easier to see how everything fits together and erasiers are alot cheaper than computer memory discs. Only, after you have been in business for 6 months or so would I start entering data into a pooter.
    ................My .02's worth .........DONOT organize\establish your business as a Formal Partnership ...for tax purposes. Form 1065 and the associated k1's and all the Rules that have to be followed for IRS Tax Filing purposes are a CPA's Dream($$$$$).
    ...............Setup your formal business structure for Tax Purposes in either of TWO forms....(1) Divide the Gross income\expenses of the Tree Bus. into equal Parts and each family will file Schedule "C" for each tax year that your working together. Reason...because you'll may decide to buy a Machine and your partner maynot have good credit so you finance it yourself. But he will get to receive half of the Depreciation if you file Form 1065. After the first year you may decide that you want to become a SOLE proprietorship because you can make more money on your own. Getting OUT of a Formal Pship where you have been filing form 1065 is a Pain in the AZZ. Again a CPA's delight($$$).
    ..............Or....Setup a SubChapter "S" corporation. This is a relatively simple form of business organization that has the BEST parts of a sole prop., pship , and a corporation. It is what they call a "Conduit". It pays NO tax. It simply files a tax return each year with all income and expense shown on the forms and THEN each partner reports his Prorata share of the Profit\loss on your Sch.form 1040.
    OK to summarize......(1) keep your own books, (2)donot file a formal form 1065 partnership tax return ...or let a CPA talk you into that situation , (3) file the first year as a Sole Proprietorship or a Sub "S" corporation., (4)find a good CPA and let them file your tax return for the first year atleast.......fordy... ;) :D
     
  13. fordy

    fordy Well-Known Member

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    Let ME clarify my earlier post.....I am NOT telling you to Dissolve your business relationship with your Friend. What I AM saying is this......What starts out as a GOOD idea for a business that two friends decide to establish ...can turn into a Nightmare when MONEY becomes involved. People change, your dedication and your DH's native ability and DRIVE may far exceed that of your friend. If...he has any hidden "BAD" habits or agenda's they will soon Manifest themselves when DH and friend start working together. I'm NOT casting Aspersations(sp) upon your friend necessarily,,, But I've seen too many well intentioned "Partnerships" decompose into situations that makes each side "just want out".
    ...............With this in mind.....Don't organize your formal business relationship into a Partnership for Tax Filing purposes because it will be VERY expensive to Extract yourself "from" if the Personal side of the business goes too hell in a Handbasket. just my o2's worth from personal observation , .......fordy :) :dance: :dance:
     
  14. Sounds like your business will do just fine.
    Just a couple of comments.

    Don't let the men get too enthused about quiting their jobs too soon.
    Remember that once all of the trees in the area are trimmed, the work will only come back as the trees add growth and need work again.

    Can we assume that all of you, i.e. the partners, have sat down with an attorney to discuss partnership business? If you haven't, you sure as heck should. If it is all spelled out clearly from the git go there won't be as many problems or any problems later.
    He can explain liability and who is held responsible or can be sued, etc.

    Best wishes for dumping the old jobs and with the new business. Just give it time though.
     
  15. margo

    margo Well-Known Member

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    No business advice here, as I am not qualified, just a hearty congratulations and hope for huge success.............Margo
     
  16. cowgirlone

    cowgirlone Well-Known Member

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    Ditto what Margo said, Congratulations, I wish you the best!
     
  17. Shrek

    Shrek Singletree Moderator Staff Member Supporter

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    When I had my flea market operation I spoke to local small business operators whom I knew and settled on the one that three of them reccomended. I then went in and explained to him that I had just started a small flea market retail operation and had plans to add outlets in the future. My accountant then explained how he planned to handle me during the initial period and the steps we would take as we expanded operations and what other services he could provide for me in the way of book keeping and such. I also made note of his certifications and the first year I had my taxes prepared by HR Block also as a comparison study. My accountant did me better.

    Two of the seasoned buisnessmen advised using a tax preparer that is a full time business accountant and not just a seasonal tax preparer
     
  18. clovis

    clovis Well-Known Member

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    First, allow me to congratulate you on the new business! Owning a business can be the greatest thing you have ever done,

    Or the worst:

    Make the business a legal partnership NOW, or better yet, start your own sole proprietorship. Here is why:

    Partner A decides that he needs a little more money in his pocket, so he goes out, gives a bid, gets the job completed, and then instructs the customer to "write him a check personally."

    Partner B winds up working 27 hours on a weekend, while Partner A is at home relaxing because he doesn't want to work. Partner A still wants to be paid half, because it is half his business, and says "I didn't want that job anyway."

    Partner B decides that he doesn't want to pay Federal Income Tax on his profits because "I pay them too much already." In many cases, Partner A could and will be forced to pay the back taxes Partner B did not pay. This is no joke.

    Partner A wears out or breaks his new truck because of the work that they are doing. Partner A will want more of his fair share, "because my truck got broke, and the new transmission will be $2300".

    Partner B is free wheeling with company money and buys something because the money "was in the account." Partner A thinks it was a waste of money, and was unneeded. Better yet, Partner B takes a family vacation with the company checkbook, stating that "it is my money too, and you're not telling me how to spend my money."

    Partner A foolishly underbids each job, costing the company profits, time and resources.

    Partner B foolishly drops a tree on a house, taking a major power line down with it. Partner B didn't pay the insurance last quarter, and the home owner, the power company and their insurers name both partners in law suits.

    The problems could go on and on. If you think for a minute "that our partner would never do any of those things", well, maybe, the only way to learn is for you to just find out on your own how bad things can be.

    You are setting yourself up for financial doom.

    The above scenarios are based on first hand knowledge of people who entered "handshake agreements" in partnerships, and are now regretting it.
    They are REAL stories, that apply to your situation.

    It is my professional opinion, after being in business for myself for 11 years, THAT VERY FEW, IF ANY, PARTNERSHIPS WORK OUT.

    I sorry if I sounded harsh, but I am trying to protect you from failure and financial doom.

    Please understand that I support you and want you to succeed in every way. Owning a business is sometimes the most rewarding life experience you will ever have. I have suggestions on how to exactly set up a decent working relationship, and will answer any questions you have. I am not a lawyer or CPA, though.

    clove
     
  19. blhmabbott

    blhmabbott We're gettin' there!

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    Thank you everyone for your support!

    Clovis: I'm sure you only had the best intentions in mind with your post and I welcome any suggestions/comments from others that would help avoid making mistakes. Let's face it....we're human....we're gonna make em. But I believe the more educated you are in your own, as well as others, mistakes the better off you can be. Live and learn. I contacted an attorney today about making up a legal contract of some sort to protect all parties involved, but I'm not sure what will be in it. Guess I'll have to wait and see. I'm assuming I can have him add any clauses I/we want in there in addition to what the "standard" legal mumbo jumbo may be.

    Could you explain the difference between sole proprietorship and partnership? Maybe that's whats throwing me through a loop. In regards to the accountants, the ones I will be contacting are full time CPA's. Thanks again for everyones advise and well wishes!
    Heather
     
  20. Shrek

    Shrek Singletree Moderator Staff Member Supporter

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    Get a copy of the book Starting and Operating a Business in Tennessee
    by Oasis Press. They offer the book customized for all 50 states in a updatable loose leaf binder for under $30.