Hello to all, ive been working in the construction industry for 10 years and am looking to start my own small construction company, doing mostly renovation and finish work. It really would only be to get a license and have insurance to protect myself on my own work as a currently am finishing up a construction management degree and work freelance for a large construction company. I would just like to put all the pieces in place now for me to go out on my own when the time is right.
I was wondering if theres anything i should know about doing a start up here in new york and what i should be aware of? also should i do a sole proprietorship or LLC?
Any information would be greatly appreciated
Thank you
Replies
Where abouts in NY?
Welcome to BT bm3301.
You've landed in a good place to learn about start ups. How far out is "the time is right?" It sounds like you are currently doing work as an independent contractor. If so, "the time is past"; meaning, you've already started!
You had better go and talk to a good insurance agent. New York is the most expensive state in the country for the kinds of liability policies needed by builders.
I know because I live in Essex County.
It can be quite a bit less to have insurance when operating as a specialty subcontractor, but a GC of the type to do new residential or major remodeling might expect to have annual premium cost in the range of $30,000 for GL.
There will be severe limits placed on how much can be subcontracted, also. The limits would prevent the type of "paper GC" businesses common almost everywhere, in which a new-construction GC subs framing and trim carpentry, plus of course sitework, excavation, foundation-building, plumbing, electrical, painting, drywall, roofing, sheet metal, HVAC, and more, concentrating only on management, supervision, scheduling, and some in-between stuff his lead guy (or himself) can do.
Operating under these strict rules, I had to hire direct labor to do foundation building (using ICF blocks), do absolutely everything carpentry-wise, do the roofing, a lot of the painting, insulating, and more.
What makes it really tough is that the established GCs, who got started 10 years ago or more, don't have these kinds of premiums, nor are they limited so much (if at all) on how much of a package they can subcontract.
LLC is the way to go, and be sure to take the Sub-S option, tax-wise.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
On long island
bm.. i would not do sole prop.
and i'd talk to a business lawyer & accountant before deciding wether to go S-corp or LLC
we decided on S-corp.. but that was in '99 and LLC's were relatively new then
incorporating is worth the hassle & expense compared to sole prop.... IF you intend to really pursue a successful business
My understanding of the situation is this:
LLC can help you with some of the liablility/ insurance issues but doessn't help with how the gov't taxes your income v. profits.
A S corp can be more expensive to establish, is harder to get out of/close if you decide to take another route, but it may help lower your taxable income. It also helps protect your personal assets, should you become involved in litigation.
Talk with a local accountant or tax attorney to see what suits your needs. I see many guys in my area with LLC at the end of the company name, but I don't think it offers quite as much protection as what they think it does.
"I see many guys in my area with LLC at the end of the company name, but I don't think it offers quite as much protection as what they think it does."I think the worry about asset protection is overrated for tradesmen. If you don't make anything, there's nothing to protect.
au contraire... if you own a house... a good lawyer can pierce the llc veil and go after your personal assets too
commingling funds can really cloud the issue
Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
Take it from a New Yawker, LLC with S is better than INC with S.
NY has far different franchise fee schedules for corps versus LLCs, and LLC annual cost are lower, particularly if the LLC has assets beyond just equipment and tools.
The LLC is less expensive to dissolve, also, when needed.
I cannot speak for business costs in other states outside NY.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
I've never heard of a LLC Subchapter S. What does that mean?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
"I've never heard of a LLC Subchapter S. What does that mean?"There really isn't anything.Corporations, if the meet the requiremsnts, can elect to be treated according to sub-chapter S. In that the, for tax purposes, it is treaded as a sole proprietor.For LLC, for a single owner it defaults to being treated as a sole propritor, but you can treat it as a corp.http://www.irs.gov/faqs/faq12-1.html.
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I stand corrected. In taxation, LLC members benefit in the same way as do shareholders in an S corp.
An LLC does not file for Sub S status.
I have both types of biz entities in NY, S corp and LLC.
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"A stripe is just as real as a dadgummed flower."
Gene Davis 1920-1985
Your assuming that most tradesmen GC's will make enough to own a house. Most of the tradesmen Gcs' I know can't even get a mortgage on the house. Let not drag this argument out too much, I was being facetious, as normal. One thing I learned about TX. If you win a lawsuit in TX, you can't garnishee wages, you cant take the the house, you can't take the truck, you can't take the tools. Good luck collecting eh?
Most of the tradesmen Gcs' I know can't even get a mortgage on the house.
Jim,
I don't want to start an argument here either, and maybe I am having a problem with the terminology, but am I understanding this right? Are you saying most tradesman you know can't get a mortgage?
While I find that there are many challenges to this business and not all of us are comfortably in the 6 figure income bracket, virtually everyone of my contemporaries, colleagues, and subcontractors have a mortgage on their house. Most I know, do well for themselves and their families.
Many of them have significantly more than that!
I've already stated that I'm being facetious. You have to remember that my recent history has me going down the tubes in MI where the guys running GC businesses and using their trade as the main service are going down the tubes at an alarming rate.
Jim,
Fair enough.
Like I said, didn't want to start an arguement. Just struck me as odd.
I have often said, "you cannot convey tone in an email".
I think you pointed this out in another post earlier this week, talking about all the LOL and ;) we have to put in to get the point across.
I'm not real good about adding the lol's and smiley faces. I think it's part of my real life dry humor style. But, I never take offense at the idea that someone would start an argument so feel free anytime to challenge anything I say. I do prefer that the argument stay on topic and not get personal though. So, argue away but please don't call me a moron....I've already gotten that enough to know it's true but theres no such thing as elevated levels of moronism.
So, argue away but please don't call me a moron....I've already gotten that enough to know it's true but theres no such thing as elevated levels of moronism.
ROFLMAO
"Never pick a fight with an old man. If he can't beat you he will just kill you." Steinbeck
Jim,NC is the same.
Anna Nicole thought so.