Tuesday

Your Lawn Care & Landscaping Business and Haiti: What You Can Do Today To Affect Tomorrow

A lot of people who have accumulated wealth have shown that it pays to give back to those who aren't as fortunate. We have all seen this.

As most people already know, people and businesses (lawn care businesses) from all over the world are doing what they can to help in Haiti.

Bill Gates has started a foundation on global health and learning. Warren Buffet has also followed this 'giving spirit' and set up his children with sufficient inheritance and then decided to pledge the rest of his enormous fortune to the Gates' foundation.

Highly paid athletes and celebrities have also created foundations to help less fortunate children accomplish their dreams. Most of these people have more money than they can ever spend in their lifetime and perhaps their children's lifetime. That's an amazing thought.

But even those of us with a more modest fortune can help raise the fortunes of others - especially those in Haiti right now.

Think of ways that your lawn business can contribute to the betterment of society. Let your employees know that this is an essential part of your business plan. Include them in the conversation about which organizations your lawn company will support or set up a matching fund so that your company will contribute to charities that match their personal interests.

Adam Smith, the founding father of modern economics, knew the incredible value of social status. The same rules apply today some two hundred years later. So remember to use your good fortune to help others who are less fortunate and make a real difference.


Successful Lawn Business Strategies


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Sunday

Lawn Care Business Success: 3 Words To Help You Fast Track To Outrageous Profits

My mentor told me these three words would change my life. He said if I use them correctly I could fast track to success. Here they are: weigh, count and measure.

I have to be honest I didn't see what was so important about these 3 words when he told me. Then he explained further that these 3 words all have to do with keeping track. You see what your results are should dictate how you act and react in situations.

You know like measuring the response rate of an advertisement over a reasonable amount of time should tell you a few things - if you keep track.

My mentor went onto say that if I discover that my results are not to my liking there are only three places to look.

My philosophy needs to be in check. My attitude needs to be strong and on track. And my personal disciplines need to continually improve. Activity, attitude and philosophy create results and results are the name of the game.

Now on the topic of results I teach that we all need to make measurable progress in reasonable time. This is a great philosophy to adopt. Not too quickly and don't take your time. Do what you must in reasonable time.

Success is a numbers game. How many prospects have you talked to? How many calls have you made? How many customers have you thanked? If your numbers don't change your life won't change. If you'll start working on improving your numbers then in time you'll start to see the change you want to see.

The bottomline is that success and results all come down to numbers. It's the numbers that count. We've all got to make measurable progress in reasonable time and the numbers are the GPS system of our life.

Here's the best time to start. Right now. Don't wait, keep track now. Measure, count, and weigh all you can. You've got to add up some of your own numbers and ask yourself if you are moving along on time and in the right direction.

Keeping track keeps you on track.

Until next time...


Successful Lawn Business Strategies

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Lawn Care Maintenance Business Tip: If You ______ You Will ______

We've all heard this saying but it is true and so very relevant to business. "If you sow you will reap." Leaders, employers, parents, teachers and volunteers are rewarded for sowing into the lives of others.

No deposit, no return. If you sow you will you will receive the amazing rewards of sowing, even in your lawn care maintenance business.

Here's what I mean.

If you sow into a child's life and take them time and again to hockey practice after hockey practice, you will see those rewards start to blossum in your life. Perhaps its the pride of seeing your child develop their skills. Maybe they develop them so much they can pay you back with more than just love and gratitude -- although that is all most want.

This is the way life works. All life wishes to respond to those who have taken the time and energy to sow. The ones who give their energy, their time, their money, their patience, their ideas, etc. The seed has been sown and is beginning to grow.

I was taught a wonderful principle that I pass onto you in this regard. Whatever you move towards tends to move towards you. When you move toward working out, stronger muscles, confidence, and all of that starts to move towards you and seeks you out.

You will always find this. Its predictable.

Put it to use in your life even more today and the days to follow.

Until next time...


Successful Lawn Business Strategies

http://www.HowToStartYourLawnCareBusiness.com

http://www.HowToGrowYourLawnCareBusiness.com


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Saturday

Turbo Lawn Mower

Sunday

Lawn Care Maintenance and Mowing Business: The Generosity Factor

Hard work without talent is a shame, but talent without hard work is a tragedy."

- Robert Half

 

There are always the nay sayers who mock the suggestion that giving away a free lunch with no strings attached is futile.

I think it depends.

Take a fancy steak restaurant for example. Yup, it would cost a lot to give away 500 free steak dinners in just one week. It wouldn't be unreasonable to suggest it could cost as much as $10,000.

But if those steaks are cooked just like the person wants and taste exceptionally good, hundreds of those people could turn into regular customers.

That means that the cost to get those customers is much lower with that "free lunch" method than through most other advertising approaches.

Any lawn care maintenance business owner could use this idea. Most won't.

Here's a story of a supermarket that did steal this idea.

With their new location up and running and in need of new customers in their new location, they gave away 5,000 quarts of milk, 5,000 pounds of butter, 5,000 cans of peaches and 5,000 packages of napkins.

Was this crazy?

You might be thinking how could they afford to give away all of those products. The money lost from doing so would be massive.

Hold on. Let me finish the story.

This supermarket created and printed up 5,000 coupon books. In each book were four coupons.

Each coupon was good for one week of the month. The first week was for a free quart of milk. The second week was for free butter. The third week was free peaches and week four was for the napkins.

No purchase was necessary to redeem these free items using the coupons. There were truly no strings attached. This was a genuine free lunch.

They mailed these coupon books to 5,000 selected families in the surrounding neighborhoods.

More than 3,000 coupons were redeemed the first week and nearly 4,000 by the fourth week.

Here's the kicker. Almost every person also bought groceries while they were there redeeming their free lunch.

The following fifth week with no free lunch coupons and also no other form of advertising, over 4,000 people shopped in that supermarket spending a total of over a half million dollars that week.

Ka-ching!

This is something to think about and I call it the "Generosity Factor".

Until next time...


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Wednesday

Lawn Mowing Business Tip: S Corp, C Corp or LLC? Which Structure Is Right For You?

S Corp, C Corp, LLC : WHICH STRUCTURE IS RIGHT FOR YOUR BUSINESS?


When a person considers starting a lawn business, or when existing lawn business owners consider changing their business structure, one of the most common options they evaluate is the corporation.

There are several different types of corporations, the C corporation, the S corporation, and LLC. Which one is best often depends on the goals you have for your lawn business.

Corporations and limited liability companies ("LLC s") are preferred lawn business structures because, unlike sole proprietorships and partnerships, both offer liability protection. This means that the owner of a lawn maintenance company cannot be held personally responsible for the company’s debts. The personal assets of an owner are shielded from company liabilities.

In researching the various business structures, one inevitably comes across the S corporation. S corps and LLC's are similar in that they are both "pass-through" entities for tax purposes. The income of these type of lawn businesses are passed through to their owners and reported on the owners’ personal income tax returns, thereby eliminating the double taxation incurred by owners of a standard lawn care corporation, or C corporation. (With a C corporation, the net business income is subject to corporate income tax, and the monies remaining after the corporate income tax are taxed a second time when they are distributed as dividends to its owners who must then pay personal income tax.)

Let's start with explaining the difference between an S Corp and an LLC? And discuss which structure is right for your lawn care business?

The answer depends on your own unique situation. There really is no other way to say it. If operational ease and flexibility are important to you, an LLC is a good choice.

If you are looking to save on employment tax and your situation warrants it, an S Corp could work for you as the lawn business structure of choice.


Lawn Business Ownership & Operation

There are restrictions on who can be owners (also known as "shareholders") of an S corporation. An S Corp can have no more than 75 shareholders. None of the shareholders can be nonresident aliens. And shareholders cannot be other corporations or LLC s. This is important.

An S Corp is operated in the same way as a traditional C corp. This lawn business structure must follow the same formalities and record keeping procedures. The directors or officers of an S Corp manage the lawn business and an S Corp has no flexibility in how profits are split up amongst its owners.

Let us explain.

The profits must be distributed according to the ratio of stock ownership, even if the owners may otherwise feel it is more equitable to distribute the profits differently.

LLC s offer greater flexibility in ownership and ease of operation. There are no restrictions on the ownership of an LLC . An LLC is simpler to operate because it is not subject to the formalities by which S corps must abide. An LLC can be member-managed, meaning that the owners run the lawn care business. Or it can be manager-managed, with responsibility delegated to managers who may or may not be owners in the LLC . This may be more attractive to your situation. The lawn business owners of an LLC structure can distribute profits in the manner they see fit.

This may be a lot to take so we'll paint you a picture.

Let’s say, for example, you and a partner own an LLC called ANYBODY MOWING LLC. Your partner contributed $50,000 for capital. You only contributed $5,000 but you perform 95% of the work.

The two of you decide that, in the interest of fairness, you will each share the profits 50/50. As an LLC you could do that. If you had your lawn business set up as a S Corp you could only take 10% of the profits while your partner would take the other 90%.

Get it? Let's keep going.


Employment Tax: Savings vs. Paperwork

A major factor that differentiates a lawn business structured as an S Corp from an LLC is the employment tax that is paid on earnings. The owner of an LLC is considered to be self-employed and, as such, must pay a "self-employment tax" which goes toward Social Security and Medicare. The entire net income of the lawn business is subject to this tax at a rate of 15.3% (rate as of this writing).

In an S Corp, only the salary paid to the employee-owner is subject to employment tax. The remaining income that is paid as a distribution is not subject to employment tax under IRS rules.

What does this mean? There is the potential to realize substantial employment tax savings.

Let's say Billy owns a lawn service business. In keeping with the industry standard, Billy decides that a reasonable salary for a lawn business manager is $35,000 and pays himself accordingly. Billy's total earnings for the year are $60,000: $35,000 paid in salary and the remaining $25,000 paid as a distribution from the S Corp . Billy's total employment tax is $5,355 (15.3% of $35,000).

If Billy were the owner of an LLC , he would have to pay employment tax on the entire $60,000, equaling $9,180. But as an S Corp, he realizes savings of $3,825 in employment tax.

Not bad. But, listen up.

One might assume that these savings could be further manipulated by reducing the salary to an extremely low amount and attributing the rest of one’s earnings to distributions, but this would be a very big mistake. In practice, the IRS is careful to notice whether a salary is reasonable by industry standards. If it determines a salary to be unreasonable, the IRS will not hesitate to reclassify distributions as salary. Don't mess with the IRS. It's never worth it.

Still, while the potential employment tax savings may make the S Corp an attractive structure for your lawn care business, bear in mind that you would then have to deal with all the paperwork associated with payroll tax.

The payroll tax is a pay-as-you-go tax that must be paid to the IRS regularly throughout the year. This means on time or you will incur interest and penalties. The paperwork alone can be an overwhelming task for someone who is not familiar with it. If you expect to incur losses or otherwise experience a cash flow crunch during the year that would hinder you from paying the payroll tax when due, this could present a problem.

Owners of LLC's pay their self-employment tax once a year on April 15 when income taxes are normally due (or make quarterly estimated tax payments, if they expect to owe total taxes of $1,000 or more). Income tax filings are also relatively easy for the lawn business owners of an LLC. A single-member LLC files the same 1040 tax return and Schedule C as a sole proprietor. Partners in an LLC file the same 1065 and Schedule C as do owners of traditional partnerships.


Employment Tax

Employment/payroll tax on salary; no employment tax on dividends paid to shareholders.
Self-employment tax on total net income.



The C Corporation Vs. S Corp

The C corporation is the standard corporation. The S corporation is a standard corporation that has elected a special tax status with the Internal Revenue Service (IRS). It gets its name because it is defined in Subchapter S of the Internal Revenue Code. In order to elect S corporation status, Form 2553 must be filed with the IRS and all S corporation guidelines met.
While the C corporation and S corporation have many similarities, they also have distinct differences.


Similarities

Both offer the same limited liability protection for shareholders (owners), meaning that the shareholders are typically not personally responsible for the debts and liabilities of the lawn care business. Both are separate legal entities created by a state filing.

The formation documents that are filed with the state, which are typically called the articles of incorporation or certificate of incorporation, are the same whether the lawn service business will be a C or an S corporation.

To recap a bit, corporations have shareholders, directors and officers. Shareholders are the owners of the company and elect the board of directors. The board of directors oversees and directs the affairs of the corporation and has responsibility for major decisions, but is not responsible for the day-to-day operations of the corporation. The directors elect officers to manage the daily affairs of the business. Most states allow one person to be a shareholder, director and officer of a corporation.

Both are required to follow the same internal and external corporate formalities. Examples of internal formalities include adopting bylaws, issuing stock, holding initial and then annual meetings of shareholders and directors, and keeping the minutes from these meetings with the corporate records. Examples of external requirements include filing annual reports, which are required by the state, and paying the necessary annual fees.



Differences

1. Taxation

C corporations are separately taxable entities. C corporations file a corporate tax return reporting profits or losses, and any profits are taxed at the corporate level. C corporations face the possibility of double taxation when profits are distributed to shareholders in the form of dividends, as the shareholders must report dividends as personal income and pay tax on them at the individual level.

S corporations are pass-through tax entities. Pass-through taxation is discussed more below.

2. Corporate ownership

C corporations can have an unlimited number of shareholders, while S corporations are restricted to no more than 75 shareholders (some say 100, check with your local CPA or attorney).

C corporations can have non-US residents as shareholders, but S corporations cannot.
S corporations cannot be owned by C corporations, other S corporations, LLCs, partnerships, or many trusts. C corporations are not subject to these same restrictions.

S corporations can have only one class of stock (disregarding voting rights). C corporations can have multiple classes of stock.

3. S corporation Election

S corporations must make a timely filing of Form 2553 with the IRS. The IRS instructions indicate this form must be completed and filed:

At any time before the 16th day of the 3rd month of the tax year the election is to take effect, or;
At any time during the tax year preceding the tax year it is to take effect. An election made no later than 2 months and 15 days after the beginning of a tax year that is less than 2½ months long is treated as timely for that year.


An election made after the 15th day of the 3rd month but before the end of the tax year generally is effective for the next tax year. However, an election made after the 15th day of the 3rd month will be accepted as timely filed if the corporation can show that failure to file on time was due to reasonable cause.


Pass-through Taxation

As mentioned above, electing S corporation status with the IRS allows for pass-through taxation of the corporation’s profits. S corporations must still file corporate tax returns, but they do not pay taxes at the corporate level. The corporation’s profits are passed-through to the individual tax returns of the shareholders, and taxes are paid on those profits at the individual tax rate. If the corporation is reporting a loss, the loss is passed-through to the shareholders as well. Because S corporations do not pay taxes at the corporate level, this eliminates the potential double tax C corporations face when profits are issued as dividends to shareholders.

How's that for an explanation? ;-)

There is no one, magical entity that works for everyone. A CPA or a specialized tax attorney can assist you in choosing the right structure for your lawn business. The important thing is to consider the operational, legal and tax aspects of each structure as they apply to your unique situation.

Nevertheless, as you determine which business structure is the best for your business, there are both online and professional resources to assist you. For advice on which structure to choose, you should contact an attorney or accountant. For additional information visit NOLO.com.

Cheers!

The Staff
http://www.howtostartyourlawncarebusiness.com

Copyright SLC

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