starting a small business

[2nstonge]

Good info from AlanB.

Oceaneering, when I started my business (home improvement/handyman) I managed to get my lawyer, CPA and insurance agent in the same room at the same time. I laid out the realities of my personal situation, my business plan and my goals for the next couple of years. Then I sat back and listened and learned while these 3 guys bandied about the different types of entities and the pros/cons of each for my specific situation.

The meeting went about 90 minutes and only the lawyer billed me for his time. I now meet with these guys every 3-6 months (2nd year in biz) just to keep them abreast of changes to my business and do a review/plan session. In my case an LLC was the best option from a liability protection point of view.

Bottom line is I would do all the reading and self-prep you can stand while interviewing lawyers, CPAs and insurance folks while developing a business plan at the same time.

Good luck, -Norm

[Dougster]

Originally Posted by randy41

Dougster...i think you are mistaken.
Limited Liability Company Information

Limited liability companies are unincorporated organizations having one or more members formed by compliance with M.G.L. Chapter 156C. Generally members are not personally liable for the debts, obligations or liabilities of the LLC. If formed properly LLCs will be treated as partnerships for federal and state tax purposes.

Thanks Randy. This does appear to imply that Massachusetts law has changed... even if the form you fill out still asks for the names of at least two persons. Maybe they can be the same? Or maybe the form is obsolete?

Clearly, I have to investigate this further. Thanks for checking!

Dougster

[2nstonge]

I would run this by a lawyer and/or CPA...it smells a little fishy.

If I interpret it correctly, one person can create an LLC, then this one person LLC gets a company credit card, charges up $10000's on 'stuff' for 'the business' and then disolves the company...but no one's personally liable or on the hook for the debt??? I lived in MA for 40+ years before relocating to VT, I would envision lines of people in MA signing up their LLC tomorrow to take advantage of that deal!

For my LLC in VT all business income (or loss) flows thru to the personal tax returns of the members of the LLC (need at least 2 people to form one) and the % to each member is determined by the operating rules of the LLC. LLC members that have signature authority and may potentially realize a gain from the LLC are also on the hook personally for any debts incurred on behalf of the LLC - even if those debts are signed for by another partner.

-Norm

[Dougster]

Originally Posted by 2nstonge

I would run this by a lawyer and/or CPA...it smells a little fishy.

If I interpret it correctly, one person can create an LLC, then this one person LLC gets a company credit card, charges up $10000's on 'stuff' for 'the business' and then disolves the company...but no one's personally liable or on the hook for the debt??? I lived in MA for 40+ years before relocating to VT, I would envision lines of people in MA signing up their LLC tomorrow to take advantage of that deal!

For my LLC in VT all business income (or loss) flows thru to the personal tax returns of the members of the LLC (need at least 2 people to form one) and the % to each member is determined by the operating rules of the LLC. LLC members that have signature authority and may potentially realize a gain from the LLC are also on the hook personally for any debts incurred on behalf of the LLC - even if those debts are signed for by another partner.

-Norm

Believe it or not, states requiring at least two people to form an LLC are in the extreme minority. If Massachusetts has indeed changed from two to one, I think that leaves maybe one state and the District of Columbia.

Dougster

[randy41]

i'm not so sure that credit card companies would issue a credit card to a newly formed llc that would have very much of a credit line associated with it.

[2nstonge]

Originally Posted by randy41

i'm not so sure that credit card companies would issue a credit card to a newly formed llc that would have very much of a credit line associated with it.

I had no problem getting one - because I'm personally liable for the financial activity of the LLC. I also have truck and equipment loans in the name of the LLC...guess I should have started in MA - zero liability of the biz goes belly up.

[Alan L.]

"The meeting went about 90 minutes and only the lawyer billed me for his time"

Thats why lawyers drive BMWs and CPAs drive Accords.

[randy41]

i would have billed you....but i would have for sure told you i was going to before.

[2nstonge]

I expected all of the meto bill to me. And it still would have been worth every penny.

In my thinking, the CPA and insurance guy get more billable hours/business from me throughout the course of the year. The lawyer only has X hours available and all of it has to be revenue generating.

-Norm

[Dougster]

Originally Posted by 2nstonge

I expected all of them to bill me. And it still would have been worth every penny. In my thinking, the CPA and insurance guy get more billable hours/business from me throughout the course of the year. The lawyer only has X hours available and all of it has to be revenue generating.
-Norm

What would help me most right now would be if one or two of you business-owning folks could give me some wild, crazed idea of what I can expect to spend in assorted government and professional fees to set up this 1 or 2 person tractor/ loader/ backhoe and winter snowplowing-based business... probably as an LLC since it does appear that the MA two person rule no longer applies. I mean... are we talking $5,000???... $10,000???... $20,000???... $50,000???... more??? Maybe someone can at least give me a range? At some point, it's going to drive me straight to the SBA for some kind of loan... or just stop this thing dead in its tracks.

Same question for business insurance. I've been told that that big bad backhoe on the back of my compact tractor is going to croak me good as that makes me an insurance-risky excavating business and not just an everyday landscaper (think: mowing lawns). I've also been warned that if I also offer tree removal, it will get even worse. I didn't think it could get any worse. My strategy will be to limit risk as much as possible through tight written contracts and absolute caps on damages (other than for gross negligence or criminal behavior), but I know some activities require huge liability coverage... such as L.U.S.T. removals.

Come on... Anyone out there brave (or reckless) enough to throw out some numbers? Even pure guesses???

Dougster