Hi Fastlaners,
I've got a little mess and am looking for recommendations on several fronts.
Big picture: I'm starting a handyman service as a stepping stone into construction and then RE investing, with the ultimate goal being to build starter homes and sell them with owner financing.
Profit First: When I started thinking about this at the beginning of last year, I decided to reject the popular notion that a business has to lose money, take no profits, or however you want to put it, for the first 1-10 years or whatever the experts are saying these days. I'm convinced the demand is high enough in the construction industry that I should be able pay all the expenses of the business from the first hour, including hourly wages and owner's equity. I had heard of the Profit First concept, the CPA I'm talking with has a couple other clients using it, so he's reading it. I decided that was enough of a recommendation for me and I'm about 5 chapters into it. If I have to find a new CPA or attorney, I'd prefer they be familiar with the concept. I also see no reason I can't go ahead and use the concept with or without GAAP, but maybe I just don't understand accounting well enough. I keep going back to memories of my grandpa's desk, with his checkbook, deposit book, receipt book, and a (usually small) stack of bills awaiting his attention. I'm sure there was nothing complicated about his accounting method, and I can't help thinking modern accounting methods are needlessly so.
Business formation: I thought I needed an S-Corp. I thought I incorporated last July, but all I actually have is a document from the Oregon Secretary of State titled Articles of Incorporation that's really only a business name registration, which I naively thought was all I needed. The attorney I was talking with at the time corrected me, but I thought he was wrong and he was too polite to push it. I also have an EIN in the corporate name, and a BIN (Oregon's EIN). Applying for the contractor's license requires liability insurance and bond in the business name exactly as filed with the state, and to start over at this point with an LLC would cause almost as much delay and added cost switching back to LLC. At this point, further S-Corp vs LLC debate seems like action faking and I've decided to go ahead as an S-Corp and possibly revisit LLC formation later. I know I will need an LLC for holding real property separate from the construction business assets and liabilities, and I assume all the other pieces of the big picture (property management, financing, land development, etc) should be done by separate entities. The attorney I was talking with last year hasn't returned my calls or emails, and I don't know whether it's because he's too busy or if we just got off on the wrong foot. He didn't send me an invoice for the initial consult until about 4 months afterward, and then I took two additional months to pay it. I need a recommendation for an attorney, or a reliable DIY legal website (Legalzoom or whatever).
2020 Taxes: I filed the business name with the state, got the EIN, and opened a bank account with $5 in July. I got certificate of insurance in November. I did my first three jobs in December, for a total of about $1800. (My contractor license application is still pending, but I can do up to $2000 worth of work for a single client without being licensed). Both clients requested an I-9, so I assume they will be filing a 1099. I've done nothing about taxes yet, and I know I'm late. However, since I haven't legally formed a corporation yet, I'm wondering if I can report that $1800 of income on my personal return instead. Does the IRS consider my business incorporated from the day the issue the EIN, or from the day the Articles of Incorporation are filed? If from the day of incorporation, then can I claim as personal income money that came to me in the form of a check made out to the name of a non-existent corporation? I think I need to get a CPA and an attorney on the phone together.
CPA: I really like the CPA I've been talking with, as a person, but he hasn't been very responsive this month. I don't owe him money yet, and I think he's just swamped with tax season right now. However, if I can't answer the above questions without professional consultation, I'm going to need to find a new CPA.
If you've made it this far, thanks for taking the time, and if you have any recommendations, thanks a heap.
David Field
DJ Field Construction Inc.
dba Huckleberry Handyman Service
I've got a little mess and am looking for recommendations on several fronts.
Big picture: I'm starting a handyman service as a stepping stone into construction and then RE investing, with the ultimate goal being to build starter homes and sell them with owner financing.
Profit First: When I started thinking about this at the beginning of last year, I decided to reject the popular notion that a business has to lose money, take no profits, or however you want to put it, for the first 1-10 years or whatever the experts are saying these days. I'm convinced the demand is high enough in the construction industry that I should be able pay all the expenses of the business from the first hour, including hourly wages and owner's equity. I had heard of the Profit First concept, the CPA I'm talking with has a couple other clients using it, so he's reading it. I decided that was enough of a recommendation for me and I'm about 5 chapters into it. If I have to find a new CPA or attorney, I'd prefer they be familiar with the concept. I also see no reason I can't go ahead and use the concept with or without GAAP, but maybe I just don't understand accounting well enough. I keep going back to memories of my grandpa's desk, with his checkbook, deposit book, receipt book, and a (usually small) stack of bills awaiting his attention. I'm sure there was nothing complicated about his accounting method, and I can't help thinking modern accounting methods are needlessly so.
Business formation: I thought I needed an S-Corp. I thought I incorporated last July, but all I actually have is a document from the Oregon Secretary of State titled Articles of Incorporation that's really only a business name registration, which I naively thought was all I needed. The attorney I was talking with at the time corrected me, but I thought he was wrong and he was too polite to push it. I also have an EIN in the corporate name, and a BIN (Oregon's EIN). Applying for the contractor's license requires liability insurance and bond in the business name exactly as filed with the state, and to start over at this point with an LLC would cause almost as much delay and added cost switching back to LLC. At this point, further S-Corp vs LLC debate seems like action faking and I've decided to go ahead as an S-Corp and possibly revisit LLC formation later. I know I will need an LLC for holding real property separate from the construction business assets and liabilities, and I assume all the other pieces of the big picture (property management, financing, land development, etc) should be done by separate entities. The attorney I was talking with last year hasn't returned my calls or emails, and I don't know whether it's because he's too busy or if we just got off on the wrong foot. He didn't send me an invoice for the initial consult until about 4 months afterward, and then I took two additional months to pay it. I need a recommendation for an attorney, or a reliable DIY legal website (Legalzoom or whatever).
2020 Taxes: I filed the business name with the state, got the EIN, and opened a bank account with $5 in July. I got certificate of insurance in November. I did my first three jobs in December, for a total of about $1800. (My contractor license application is still pending, but I can do up to $2000 worth of work for a single client without being licensed). Both clients requested an I-9, so I assume they will be filing a 1099. I've done nothing about taxes yet, and I know I'm late. However, since I haven't legally formed a corporation yet, I'm wondering if I can report that $1800 of income on my personal return instead. Does the IRS consider my business incorporated from the day the issue the EIN, or from the day the Articles of Incorporation are filed? If from the day of incorporation, then can I claim as personal income money that came to me in the form of a check made out to the name of a non-existent corporation? I think I need to get a CPA and an attorney on the phone together.
CPA: I really like the CPA I've been talking with, as a person, but he hasn't been very responsive this month. I don't owe him money yet, and I think he's just swamped with tax season right now. However, if I can't answer the above questions without professional consultation, I'm going to need to find a new CPA.
If you've made it this far, thanks for taking the time, and if you have any recommendations, thanks a heap.
David Field
DJ Field Construction Inc.
dba Huckleberry Handyman Service
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