Transitioning from Home Maintenance to Light Commercial

[Gadgetnut]

Hi everyone. After four years now, the construction around my place is pretty much completed and we're in mostly maintenance mode now. I have the ToolCat and about a dozen tools sitting in my shop not getting a whole lot of use. I also have a helper guy working for me who has gotten really good with the ToolCat over the last year, just taking care of my place.

Over the past few years my neighbors have asked me to assist them but I didn't because I lacked the proper insurance-- liability and so on. Since the equipment is paid for and just sitting here, I'm considering starting an LLC, getting a contractors license (= landscaping) and the proper business insurance to take on jobs like driveway grooming (angle broom, box scraper, blower), light snow plowing (doesn't usually snow a ton here), trenching, stump grinding ($$$'s), and maybe even some mowing.

I know there will be some $'s required to get the needed business insurance but I'm considering giving this a shot. I'm not trying to make a full on landscaping startup company right off the bat, but rather to be able to respond, do a good job, and hopefully by word of mouth build up a few steady customers. Some added hours & revenue would also help keep my helper more steadily employed, too.

Any certain things I should consider or do? Thanks a lot. -wheeler

 

[yellowdogsvc]

I listen to Dave Ramsey a lot and he says that you don't need an llc or s corp until you make some significant money. Instead, focus on good insurance and a DBA and possibly a separate business account. It will save you a lot of headache later to get a name put aside, however, if you have a lot of assets (ie., your property could be taken in a suit, then I would look at the LLC or corp. route.) I know I incorporated too soon because homes are exempt in Tx from judgments, however, it gave me the extra peace of mind.

Find a good name and get your marketing plan together. Develop a business plan, too.
Is this a part time job or could it go full time if you are successful?

 

[Gadgetnut]

Hey Yellowdogsvc, thanks for replying. Today I spent two hours on the phone with two different insurance agents-- transitioning from home use to commercial would involve me getting the LLC, plus applying for a landscape contractor's license, then speaking with my state's labor & industries department to get "rated" for the kind of work I propose to do-- lawn mowing, snow plowing is less invasive than digging and trenching and stump grinding for example... I will find out if I need to be bonded. The general liability for the operation of the equipment, the workman's comp for my helper, the excess liability, and so on...

My privately owned pickup truck has always pulled the utility trailer that transported the ToolCat for service, but in a for hire application, who owns the pickup truck (me or the LLC) is another issue. (In the old days of me having time off I used to use this same pickup truck to pull my recreational fifth wheel trailer and I know I don't want to use a commercial truck to pull the RV-- you get into weight and licensing issues, etc.)

All of this is somewhat of a paper nightmare, but it has a beginning and an end. Whether it would pay to go thru all this depends on how much work we'd undertake. Still thinking about that one.

I'm thinking the main money maker in my arsenal might be my Bobcat SG 60 stump grinder. You have one, right? Do you use it on a ToolCat or a SkidSteer? It's worked great here for me around the farm but in the commercial world I sometimes wonder whether this ToolCat-mounted stump grinder could physically get to the customers' stumps-- either because the ToolCat doesn't fit in tight places or because the ToolCat lacks the traction to move there. Have you had to replace any of the teeth on the grinder? Do they wear down or get dull with normal usage on wood or do they break if you hit a rock?

 

[yellowdogsvc]

gadget,

I have the SGX stump grinder, the high flow version. My b series toolcat is on the low end of the spectrum for the grinder but it actually does a pretty good job and works with the TC electrical system. I like the stump grinder and haven't replaced teeth other than two that got bent on a rock. I work in rock all the time and Bobcat's wheel is one of the better designed wheels. Really protects the teeth. I haven't put that many hours on the grinder like I thought I would but I got it right before economy hit the pot. Still, the hours I have had on it have been in tough conditions on ultra hard oak, surrounded by rock, and the teeth have done well. I'm impressed with the Bobcat grinder and yours is the same as mine except for the motor.

Seems like Washington is tough on business. Texas just requires a sales tax permit. Almost nobody has one in my line of work but I do. No bonding required. Licenses are only for irrigation, plumbing, electrical, etc. Needless to say, there are a lot of hacks running around and no regulations to stop them!

Insurance is a must. Relieves some of the stress and takes risk away from you so you can sleep at night with those lawyers between you and a potential problem!


I think you will find the toolcat can get in some tight locations with that grinder. Not sure about the traction. I have those issues too. I did switch to more of a skid steer tire, though. A little more chevron on the rubber. My dealer found them for me. If I get to the barn today, I'll try and get some pictures. It's dark and raining here...rare for Texas!

 

[Spudgunner]

I basically did what you are proposing to do except I do not have any employees. I had never owned my own company and wanted to try in my old age (52).

When talking to insurance there are certain words NOT to use. "Excavation" tops my list. When you use that word insurance underwriters get pics in their minds of big trackhoes and dozers it seems. When talking about snow removal, a good, safe, similar job is "streetsweeper". Using the "E" word would've cost me so much in insurance that it was cheaper/easier not to even pursue that line of biz. The fact that I was planning on doing only minor, shallow trenching for sprinklers didn't seem to matter.

My daughter set up a LLC in WA a couple of years ago. It was a snap and cost her a few hundred dollars at most.

We use Quickbooks for accounting. My wife has some funky QB certificate and she frequently saves my bacon with this software (I have a love/hate relationship with QB).

As you probably already know, opening a biz in Idaho is possibly even easier than TX...if that's possible!

 

[HL649]

I use my TC mostly around the farm but have been using it off the farm lately to bring in a little extra money. My insurance company charges me an extra $400/year for off farm use as long as it isn't oilfield use. I have a Ltd. company that works in the oilfield (but not construction related) so my insurance company just assumed that I would be using the TC in the oilfield. They wanted over $1000/year if I had oilfield exposure. I use a personal truck and trailer to haul the TC, both have commercial use clause added to the policies. I use the truck for other use so that cost isn't anything extra for TC use.

 

[tmarch]

You might check on forming a LLC and a limited business insurance or no insurance. The LLC, having no or very few assets is not worth someone hiring a lawyer to sue and as long as you are just helping neighbors etc. you don't actually have a business. Just agree to accept payments that have been agreed upon. Maybe NOT the best for a real business, but until you get going???????????

 

[yellowdogsvc]

You might check on forming a LLC and a limited business insurance or no insurance. The LLC, having no or very few assets is not worth someone hiring a lawyer to sue and as long as you are just helping neighbors etc. you don't actually have a business. Just agree to accept payments that have been agreed upon. Maybe NOT the best for a real business, but until you get going???????????

you still need insurance. It puts a bunch of lawyers between you and a would be suit. A good lawyer can poke a hole in a corporate veil.