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Business Advice Please

by infamous dave
19 replies
I know there are some smart business people here so I thought I would pose this question and see if I can get some advice.

My wife and I currently own and operate two separate cleaning businesses. She has owned a house cleaning business for 10 years and I have owned a carpet cleaning business for the last 4 years. They are separate DBA's but neither has an EIN at this time because we have not hired employees up until now. We are going to start a 3rd cleaning company with plans to start between 1-3 more companies in the future. We like the idea of separate companies for marketing purposes as each service has a slightly different target demographic and a different USP.

We would like to form LLCs now so My question is: should we start one LLC as a parent holding company and run all other DBAs under that one LLC? For example, we could have a company called Excellent Services, LLC and between 3-6 DBAs owned by that company.

I'm assuming we could then just have one bank account and one tax return? Is this the way you would set this up?

If so, would you continue to have separate websites for each business or would you house them all under one website with many landing pages for each business/service?

Thanks in advance.
#advice #business
  • Profile picture of the author kenmichaels
    Originally Posted by infamous dave View Post

    I know there are some smart business people here so I thought I would pose this question and see if I can get some advice.

    My wife and I currently own and operate two separate cleaning businesses. She has owned a house cleaning business for 10 years and I have owned a carpet cleaning business for the last 4 years. They are separate DBA's but neither has an EIN at this time because we have not hired employees up until now. We are going to start a 3rd cleaning company with plans to start between 1-3 more companies in the future. We like the idea of separate companies for marketing purposes as each service has a slightly different target demographic and a different USP.

    We would like to form LLCs now so My question is: should we start one LLC as a parent holding company and run all other DBAs under that one LLC? For example, we could have a company called Excellent Services, LLC and between 3-6 DBAs owned by that company.

    I'm assuming we could then just have one bank account and one tax return? Is this the way you would set this up?

    If so, would you continue to have separate websites for each business or would you house them all under one website with many landing pages for each business/service?

    Thanks in advance.
    Where you register your LLC will answer some of your questions.
    You need to talk to a tax attorney- what your proposing .. here in FL
    will have you hemorrhaging taxes.

    What you might want to talk to him about - is where to register your
    parent LLC - I have one in Denver because of tax breaks.
    but then I have INCs umbrellaed under it in FL.

    for me its all about taxes - not liability.
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  • Profile picture of the author Oziboomer
    Originally Posted by infamous dave View Post

    We would like to form LLCs now so My question is: should we start one LLC as a parent holding company and run all other DBAs under that one LLC? For example, we could have a company called Excellent Services, LLC and between 3-6 DBAs owned by that company.

    I'm assuming we could then just have one bank account and one tax return? Is this the way you would set this up?
    I don't know about the corporate structures and legislation in your country but I would only suggest separate companies if you intend to sell off individual entities later.

    The tax situations are something that you should get advice on.

    Much as Ken mentioned you need to get specific legal and accountancy advice.

    I know from a cost and "Red tape" compliance issue I run my operations under a corporate trust structure where we have a Company as a trustee for the family trust but that is a tax based structure and also one that offers some protection to personal assets.

    It is a valid question to ask about structure and it shows you are planning for where things will move in the future.

    Your accountant should be able to answer your questions and then you can weigh up the flexibility of DBA versus independent structures.

    From an administrative point of view and not fully knowing your county's corporate structures I would personally prefer a structure that reduced my burden on compliance whilst offering adequate protection to my family.

    Plus you have to weigh up the legal costs of setting up entities that may be un-necessary.
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  • Profile picture of the author bizgrower
    I am in Colorado. My CPA advised me not to incorporate in Vegas, for example, (which has no
    State income taxes) ,because Colorado will come after you if you are doing it to avoid Colorado State taxes. Where is your main residence? Where is your office? Where do you get mail? Where do your kids go to school? How much business do you do in Vegas? How many times per year do you go there? Do you have another residence there? In his opinion, a business agent is not sufficient protection.

    Anyway, you do need tax and legal advice for your location(s), State(s), and individual situation.

    In addition to LLC, a C or S corporation should also be inquired about.
    The tax advantage the others mentioned most likely has to do with payroll.
    As a DBA or sole proprietor, you pay income tax, FICA (social security), and Medicare/Medicaid
    on all income. When you incorporate, then you pay those payroll taxes based upon the salary
    or wages paid, including to your wife and yourself.

    Have to do it right because it's not always super easy to switch from one type of entity
    to another.

    (In a nutshell, not all inclusive, and I am not a CPA or JD.)

    Accounting administration, liability protections, taxes... are all considerations.

    Time of year, (which tax year), you do it for tax advantages is another consideration.
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    • Profile picture of the author Ron Lafuddy
      Originally Posted by bizgrower View Post

      I am in Colorado. My CPA advised me not to incorporate in Vegas, for example, (which has no
      State income taxes) ,because Colorado will come after you if you are doing it to avoid Colorado State taxes. Where is your main residence? Where is your office? Where do you get mail? Where do your kids go to school? How much business do you do in Vegas? How many times per year do you go there? Do you have another residence there? In his opinion, a business agent is not sufficient protection.

      Anyway, you do need tax and legal advice for your location(s), State(s), and individual situation.

      In addition to LLC, a C or S corporation should also be inquired about.
      The tax advantage the others mentioned most likely has to do with payroll.
      As a DBA or sole proprietor, you pay income tax, FICA (social security), and Medicare/Medicaid
      on all income. When you incorporate, then you pay those payroll taxes based upon the salary
      or wages paid, including to your wife and yourself.

      Have to do it right because it's not always super easy to switch from one type of entity
      to another.

      (In a nutshell, not all inclusive, and I am not a CPA or JD.)

      Accounting administration, liability protections, taxes... are all considerations.

      Time of year, (which tax year), you do it for tax advantages is another consideration.

      Privacy       may be another.
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  • Profile picture of the author iAmNameLess
    Guys... it doesn't matter where you register your LLC, even if it is a holding company. The reason being, is that there literally will be no tax advantages for an LLC. It's a pass through entity, so whether you register in Nevada, South Dakota, Delaware, or Wyoming, you're still going to be taxed at the rate of the state where you live. It doesn't offer that level of separation.

    The only exception, and it's probably what Ken's accountant or lawyer did, is filed for IRS taxation status as an S-Corp instead of LLC, so he can pay what would be considered a reasonable salary and take in the remainder of profits as capital gains to avoid self employment tax on 100% of the money.

    To answer the OP's question.... which doesn't seem to be about taxes at all.... Yes, you can have 1 LLC acting as the holding company with all those DBA's under it and file one tax return. I would talk to an attorney or CPA though to see if you would be better off filing as an S-Corp. I assume you would be saving a lot of money through taxes that way.

    The major concern would be, are these REALLY different companies or are they just simply different DBAs? That's important because if it's a different company you should be creating subsidiaries to the main company, which is a lot more paper work, separate books, separate everything. You will need to transfer stock of each company to the parent company and pay all the extra fees to the secretary of state.

    Do yourself a favor though... we can all play tax adviser or attorney on a forum, but if you're seriously considering this you need to speak to one in real life.
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  • Profile picture of the author Freebiequeen1999
    Just hate to be the voice of reason but....

    over the years on the Internet I remain amazed when people ask for important info/advice/ and input on important decisions

    example = on cosmetology forums....it is cool and appropriate to ask "what masque do you prefer for sensitive skin?"....but when someone says "I have this mole that seems to be getting bigger">> please please just go to the doctor ...GO TO THE DOCTOR, DERMATOLOGIST

    and so forth - ok to say "what software do you prefer?" or "what kind of pitch should I try"..

    but ...when you ask people on the internet for legal advice, financial advice, advice that affects your life and your family and your business....I simply go WHATTTTT??

    Geeze....please get with an attorney, tax adviser, one/s that advise people about this (in your state)
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    • Profile picture of the author infamous dave
      Originally Posted by Freebiequeen1999 View Post

      Just hate to be the voice of reason but....

      over the years on the Internet I remain amazed when people ask for important info/advice/ and input on important decisions

      example = on cosmetology forums....it is cool and appropriate to ask "what masque do you prefer for sensitive skin?"....but when someone says "I have this mole that seems to be getting bigger">> please please just go to the doctor ...GO TO THE DOCTOR, DERMATOLOGIST

      and so forth - ok to say "what software do you prefer?" or "what kind of pitch should I try"..

      but ...when you ask people on the internet for legal advice, financial advice, advice that affects your life and your family and your business....I simply go WHATTTTT??

      Geeze....please get with an attorney, tax adviser, one/s that advise people about this (in your state)
      Over my years of the internet, the thing I am amazed at is why so many people feel the need to be condescending. I understand that no one here is obligated to answer my question and if they do, the info provided may or may not be correct.

      If it makes you feel better, I DO have a meeting scheduled with my tax accountant this afternoon and am ready to seek out the help of an attorney or any other professional my accountant advises for me. My post here was merely to attempt to educate myself a bit on the subject before I enter the meeting.

      Thank you all for your posts and advice.
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      • Profile picture of the author Freebiequeen1999
        Originally Posted by infamous dave View Post

        Over my years of the internet, the thing I am amazed at is why so many people feel the need to be condescending. I understand that no one here is obligated to answer my question and if they do, the info provided may or may not be correct.

        If it makes you feel better, I DO have a meeting scheduled with my tax accountant this afternoon and am ready to seek out the help of an attorney or any other professional my accountant advises for me. My post here was merely to attempt to educate myself a bit on the subject before I enter the meeting.

        Thank you all for your posts and advice.
        Then why ask here? Condescending...no just realistic
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        • Profile picture of the author bizgrower
          Originally Posted by Freebiequeen1999 View Post

          Then why ask here? Condescending...no just realistic
          Us people who are chopped liver and not the voice of reason - LOL (and he seems like an intelligent man) gave him tips that could save him thousands and other advantages. And enough tips such that he might consider a second or third professional opinion in case the first professional he consults does not seem knowledgeable or experienced enough. Just about everybody also said to consult a pro.

          Personally, I've seen a few times where people did get really bad advice from CPAs or lawyers.
          The worst I know of was a dress shop owner who was a sole proprietorship with income after expenses of over $100k (huge tax burden). And then she was given misinformation about how to convert to an LLC, or whatever other incorporation would have been right, allowed her to pay income tax and payroll tax on just her reasonable salary, and pay herself dividends or reinvest in the business...

          ..........


          Back to OP, since nobody answered your website(s) question, I think how to do it depends upon how important it is to separately brand each business, and to eliminate confusion in the eyes of the consumer. You might want to post this question as a separate thread with more information about each business.

          Sometimes with consumers it's effective to provide one service, such as carpet cleaning, and then
          get into "by the way we also do weekly house cleaning"...

          Dan
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        • Profile picture of the author iAmNameLess
          Originally Posted by Freebiequeen1999 View Post

          Then why ask here? Condescending...no just realistic
          To be fair, CPA's and lawyers don't always think like entrepreneurs. There's a big difference in the advice.

          There's many times you can go in and ask for their recommendation and it won't be as efficient as if you've already asked business owners for their input, then ask the attorney or CPA about whether that would be a good idea or not, or if they have a better recommendation. Otherwise you're going to be getting generic recommendations that aren't really tailored to you.
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        • Profile picture of the author infamous dave
          Originally Posted by Freebiequeen1999 View Post

          Then why ask here? Condescending...no just realistic
          I already explained why I asked here, and yes, your post was definitely condescending.
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  • Profile picture of the author bizgrower
    Personally, I generally like professional's with at least five years experience in their profession.
    And experience with your situation. (Usually, more like ten years experience as a JD or CPA, and
    at least five in your field. Verifiable.)

    My siblings found a cheaper CPA than the one's I suggested. They ended up re-doing
    his work. Turns out he did not have experience in their issue (real estate partnership),
    but told them he "could handle it". Dorks everywhere.
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  • Profile picture of the author AmericanMuscleTA
    I created two LLCs and they both have different EIN numbers, but the one is under the other for tax purposes, but separate companies.


    My CPA files my taxes as an S-corp which saves a ton on taxes.


    As far as bank accounts, yes you can have multiple LLCs under one account, just be sure your bank has the names of your other businesses on the account.
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  • Profile picture of the author infamous dave
    Thank you everyone for all the advice. I met with my accountant today and I think I got some good advice there too. We are going to set up an LLC to run all the DBA's through. I feel confident now to move forward. Now if I was as sure of what I should do about the website or sites?
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    • Profile picture of the author Oziboomer
      Originally Posted by infamous dave View Post

      Thank you everyone for all the advice. I met with my accountant today and I think I got some good advice there too. We are going to set up an LLC to run all the DBA's through. I feel confident now to move forward. Now if I was as sure of what I should do about the website or sites?
      A good relationship with a good accountant over the years really does make a difference not only as to how much tax you pay but the peace of mind you have when someone really cares and watches your back.

      I've been with the same accountancy firm...although I have a different accountant from when I first started...since 1991.

      We have so many compliance issues in Australia and I am paying a variety of taxes every month and having to lodge returns on the 21st and 28th of each month.

      Last weekend I spent maybe 16 hours on compliance issues so I could get my data to my accountant for a lodgement before Tuesday.

      I'd completed the various things I needed to do at about 5.30pm Sunday...I transferred the files via dropbox at like 11-30pm Sunday Night and the next day at 1.20pm I was on the phone discussing the situation whilst we went though the lodgement via the tax office portal.

      That one lodgement reassured me and saved me a ton of money...five figures...and it's why I pay my accountancy fees monthly in advance because you need someone who understands the situation and when you need real support you've got someone who will back you and go the distance...

      ...none of this...he'll call you later BS.

      May business be good to you Infamous Dave and be sure to ask questions from both the qualified and non-qualified and know when to listen and when to act.

      I know there are a number of times in my life I wished I'd asked advice but there wasn't any forums in those days...
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  • Profile picture of the author bizgrower
    From wiki (I had to look it up. And I always thought Australian was my second language. LOL):

    "In Australia the electronic placing of personal tax returns with the authorities is described as the electronic lodgment (note: alternate spelling) of tax returns.[3]

    One of the best Online Lodgement Software in Australia is Govreports."
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    • Profile picture of the author Oziboomer
      Originally Posted by bizgrower View Post

      From wiki (I had to look it up. And I always thought Australian was my second language. LOL):

      "In Australia the electronic placing of personal tax returns with the authorities is described as the electronic lodgment (note: alternate spelling) of tax returns.[3]

      One of the best Online Lodgement Software in Australia is Govreports."
      Over the years in business the burden of meeting tax deadlines has increased at least ten fold for me.

      My months and quarters look like this....

      State legislation says I must lodge retirement contributions currently 9.5% of gross wages by the seventh of the month.

      Federal legislation says I must lodge the same payments by the 28th day of each quarter.

      If we breach the legislation we are subject to a 100% fine of the outstanding amounts plus interest.

      I've had friends who are CEOs or Company Directors fined for not paying their own superannuation.

      The govt brought in "Super Choices" where any staff member can choose any approved fund manager.

      It went from lodging one return to lodging into five different funds for 8 employees.

      From 30th June I have to lodge all super payments before 7th of month the month after accrued.... at least it will be with one clearing house so...maybe slightly less red tape.

      On the 21st of each month I have to lodge instalment activity statements which is employees tax and make a payment. Staff PAYG (pay as you go)

      On the 28th of each quarter I have to pay personal PAYG...

      and...

      GST or consumption tax (VAT - sales tax) for the quarter just passed.

      Annually I have to pay any shortfall in personal PAYG and then get reassessed for "Future PAYG" plus I have to pay corporate tax and usually any taxes on distribution of profits amongst members of my family trust.

      When I started in business you at least got to hold onto some of the money until the end of the year.

      Likewise when I started in 1991 the Suerannuation rate was 3% and the talk was by the year 2000 it would be 7% for employers and 3% for employees....

      Well it's now 9.5% for employers and ZERO 0000000 for employees.

      Nothing against retirement savings but staff don't see them as a real "over and above" wages contribution...they just see it as their "Right"

      Considering the national minimum wage is $16.87 per hour and plus 25% for casual staff and most staff even untrained youth want to be paid between $21 and 25 per hour you can understand why everything is overpriced down under.

      The silver lining....

      The tax system is great barrier to entry...
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  • Profile picture of the author bizgrower
    Retirement contributions are mandatory for all employers?
    That would make employees see it as a right and not appreciate what you're doing.
    I'm sure as everywhere, but I know people here who view entitlements as rights and
    spend as much time figuring out how to game the system as they could spend getting skills.

    Are pensions mandatory as well?
    US Companies go to some lengths to avoid retirement and pension benefits.
    For example, Coors Brewery (now Molson/Coors) only hires new people as
    temporary workers through an agency (except for highly skilled positions).
    And the only ones they hire permanent are for the key positions, such as filler
    operator on up. (The filler machine is rather complex and accuracy is required...)

    Can you fire employees who, of course, deserve to be fired?
    I've heard that in Greece an employer can fire, but they still have to pay salary
    for two years - so not many get fired and morale, productivity, and service are low.

    How is the economy there? It seems like growth would be difficult?


    Dan
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    • Profile picture of the author Oziboomer
      Originally Posted by bizgrower View Post

      Retirement contributions are mandatory for all employers?
      That would make employees see it as a right and not appreciate what you're doing.
      I'm sure as everywhere, but I know people here who view entitlements as rights and
      spend as much time figuring out how to game the system as they could spend getting skills.

      Are pensions mandatory as well?
      US Companies go to some lengths to avoid retirement and pension benefits.
      For example, Coors Brewery (now Molson/Coors) only hires new people as
      temporary workers through an agency (except for highly skilled positions).
      And the only ones they hire permanent are for the key positions, such as filler
      operator on up. (The filler machine is rather complex and accuracy is required...)

      Can you fire employees who, of course, deserve to be fired?
      I've heard that in Greece an employer can fire, but they still have to pay salary
      for two years - so not many get fired and morale, productivity, and service are low.

      How is the economy there? It seems like growth would be difficult?


      Dan
      Retirement contributions are compulsory currently at 9.5$ for all Australian employers.

      Full time staff get 4 weeks paid annual leave and usually they get 17.5% loading on that leave also.

      Eight days paid annual sick leave that accrues and can be carried forward.

      Long service leave of 13 weeks paid after 15 years and Pro-rata if taken after ten years.

      We used to have tremendous growth in many sectors as Australia is a mineral exporter so when the commodities were up and China was booming it was "all milk and honey"

      We did have through that time "enterprise bargaining" and "individual employment agreements" where employers and employees could freely negotiate conditions.

      Although this did push up wages there was also flexibility.

      Gov't changed and all those agreements rapidly got a "use by date"

      Wages didn't come down but the flexibility was removed and employers were often locked into higher wages and restrictive dismissal legislation....several verbal warnings followed by written warnings...then dismissal...otherwise paid redundancy that in many cases could add up to a week of pay for every year of service plus other additional amounts depending on age and industry etc.

      That also had to be "negotiated" with the employee otherwise you could end up on the end of a "wrongful dismissal" court case

      I suspect many sectors of the market are in recession but the overall growth rate might be 2.5%....we'll know after out federal budget in May.

      Personally my businesses continue to grow above average but margins are always under pressure from currency depreciation.

      The real issue is no clear majority political leadership so nothing gets done and business is in limbo.

      Everyone just gets on but the "easy" opportunities are not there for beginners like they were when I first started in business.

      Now it is pretty hard for a start up...
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