Should I start an LLC?

Hi there, brand new inspector here. I live in Oklahoma and I just got my license. Its an “inactive” license until I get Min $50K in general liability. I was thinking of working for somebody to get experience. I had coffee with the owner of one company a couple of weeks ago and they are hiring around Feb-March. He keeps his inspections as 1099 Contractors which makes sense.

My question is this: Should I start an LLC even though I am going to be working for somebody else? Or just get insured as myself and have them make checks payable to me vs an LLC

My thoughts with an LLC is that its keeps everything nice and clean and keeps liability off of me and into my LLC. What are you thoughts?

Thank you so much!

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In my opinion, if you are a contractor, you should have yourself set up as a business.

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Ask your lawyer and accountant…they are important to have unless you like talking to the IRS.

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@lkage has it right.

In my opinion, there are two considerations when setting up your business structure.

  1. Tax ramifications
  2. Legal ramification

To make my decision I went to the my accountant first. We structured my business as an LLC filing as an S-corp. But I also had other options to include a sole proprietor with a DBA (Doing Business As).

Then, I reviewed this decision with a lawyer. I recommend due diligence to include more than one opinion before making a decision.

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Good question for an accountant probably, but I think it depends on the state. In my very loose understanding of taxes in Texas, for example, a single person LLC is viewed the same as an individual person and isn’t necessary. (don’t be surprised if that’s a very flawed understanding)

I had one set up before inspecting, though, and I like having it separated from my personal finances.

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Here is my take: A Limited Liability Company is the way to go. Yes! It will keep your personal assets safe, but only if your bookkeeping keeps your finances separated from each other. Once you break the LLC ‘wall’ and start using your company checking account to buy groceries for your family, then the lawyers will also cross that wall in a court of law to come after your personal TV couch and even your house. You must keep things separated and my suggestion is get a CPA to advice you and/or hire Quickbooks to keep your records in order day-by-day. Pay yourself a ‘owner management draw’ when you need money to buy groceries or personal stuff. Book it…! Document it properly…! Treat the LLC like if it is somebody else’s company. Ask for an advance to take care of your personal stuff. When you buy a piece of equipment from your personal checking account or credit card, it is a capital investment for that company and the LLC will owe you money then. If you use a car that is registered in your name that you bought before the LLC was in existence, have the LLC pay you mileage for its use for business. Keep track of the miles to those Inspection sites, separately from your family vacation trips. You can inventory your personal tool box and quantify its current market value, then add that to the company assets as your capital contribution as a owner 100% share holder. Do not let your clients climb in your ladder to pick at the attic condition, if they fall, is your LLC’s liability. Take pictures or video of what you find in the attic and show it to your client in your device or tablet.

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@pmarin That is exactly how I run my businesses. I pay myself a salary which is challenging for hand to mouth income when starting out, however a good accountant can get you through this.

One more bit of advice to all inspectors. If in the USA (possibly other countries/states), pay your quarterly taxes! Unexpected tax liability sinks many ships.

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Great post, thanks. Im getting ready to do my taxes for the first time since starting inspecting.

I had the neighbor of a property I was inspecting ask if he could borrow my ladder during the inspection to change a light bulb ~20’ off the ground. That’s a hard “no”. I tried to do it for him after the inspection and couldn’t safely reach it.

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Sometimes quarterly tax payments may not be feasible based on seasonal revenues. That too can be a strain on your business if income fluctuates through out the year. Being an individual owner of a LLC, my filing ID is my personal SSN. I pay year end taxes and have set aside a tax account. Separate bank account just for tax purposes. Rule of thumb being 25 to 30% of the inspection fee goes into that account or you can choose monthly gross income from inspections. It’s worked well so far.

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