Dec 1, 2017
Basics of Starting Your Handyman Company
The best place to learn about starting up and operating a highly profitable Handyman Company is Dan Perry Handyman Startup. Here is a link to his online course that is only open twice a year. Get on the list.
The next steps are all about Company Structure. We recommend being an S-Corp because it has several benefits over any other structure like LLC, C-Corp, and Partnership.
They like it because it is simple and cheap to set up in the
beginning and they do not care how much you will be overpaying on
your Income Tax! In most cases, they will set up your Handyman
Company to be taxed as a Sole Proprietor, which means you will pay
payroll taxes on all the net profit. In the first year in business,
this might be almost nothing.
The problem is that a Handyman Company Owners and Construction
Contractors never go into business with the idea of NOT MAKING A
PROFIT. The difference between a Not Profitable Company and a
Profitable Construction Company can be a few jobs that went well
and paid before the end of the year.
You cannot go back to the IRS
and say – I changed my mind, and now I want to be
treated as an S-Corp for this year because I made a profit. It
doesn’t work that way. For an LLC – forms must be filled out early
in the new year for that year and can be treated as an S-Corp every
year going forward.
When a Handyman Company Owner or a Construction Contractor chooses
to be an S-Corp in the beginning, then no one gets confused on what
you expect. An S-Corp is always treated as an S-Corp. Just a quick
heads up; Corporate Officers must take a reasonable salary (W-2
income) and the balance either as dividends or invests it in
retirement accounts. It defeats the purpose to be in business if a
Corporate Officer takes payroll for every dollar taken out of the
company.
If you want to be paid like a regular employee, then save yourself
a headache and be an employee for someone else. Being in business
is full of challenges, some fun, and others not so much fun.
Decisions are made every day (many days it feels like every minute
of every day). As the Owner, there is no one to tell you what you
supposed to do or what you have to do. Of course, there are nasty
letters, phone calls, or fines and penalties when do you not pay
what you are supposed to pay by the due date.
When choosing a name for your Handyman or Construction Company, I
recommend that the Corporate Identify is more general and not an
exact match to the Trade Name you may be using. Why – because
as an S-Corporation you can evolve and change what you do and keep
the same Corporate Structure.
We started out as Construction Contractors, at one time we were
General Contractors and at some point changed to being
predominately a Specialty Trade Contractor. Individual changes
within that space, we worked New Construction, Remodel, Service,
and Repair - all of which were slightly different.
Employees that were fantastic in New Construction did not do well
in Residential Remodel projects, or Commercial Tenant Improvement
(TI) Projects and Vice versa. An entirely different group of
employees loved service and repair but were clueless when it came
to New Construction for Residential Remodel or TI Projects.
We have been Construction Accountants for many years now but
remember each of the phases of our own career. From permits,
sitting for inspections, wearing a hard hat, buying safety glasses
by the case, and a zillion and one other OSHA and safety items. We
have not forgotten what it is like on your side of the world, in
the trenches, doing the work that needs to be done in the mud, the
blood, the sweat and the tears.
The next step in your business search is where do you want to do
business? My recommendation is to have an office, warehouse,
mailing address away from home. Your home is your castle, and you
need to put Family First. The last thing you need is a drunken
employee or customer showing up on Saturday night to talk about
what they don't like about you or your company.
As a contractor, you can handle anything and everything. But you
need to have the peace of mind that no one is calling or dropping
by your house to leave or pick up a check, discuss the job (good or
bad) after a few beers. In my opinion, this also includes
employees.
It sounds cost effective to have your shop in the garage or
basement. Not so nice if those same employees do not respect your
personal space and go wandering in your bedrooms, family rooms,
kitchen and anywhere else they please. Get a business address.
Nothing is so important that you can’t handle during the day or to
meet someone away from home and family.
I strongly recommend you do this before you set up your business.
This will limit the number of places your home address is listed.
Government Agencies can find you for behind the scenes you and your
company are tied together (and somewhere that will include your
home address) What you are limiting is the number of places your
home address is in public view for everyone to see and drop by
unannounced.
Set up more than one bank account. Limit the amount of money in the account with a debit card. If the Debit Card is lost – all the money in the account is a lot no matter who you are. Setup business checking accounts (even if you are a sole prop) and pay business expenses out of business checking accounts.
Lend your Handyman Company money as needed. With a good Construction Accounting System that money will be
tracked. You can pay yourself back. Without a good Construction
Accounting System then it is too easy for the money to appear as
income and therefore taxable.
Many Construction Contractors pull money out of the company only to
determine they needed to put the funds back into the Construction
Company to pay bills or purchase material to do the next
project. Designate personal credit cards for business and try
to never use them for personal. This again helps isolate business
from personal expenses.
It is all about the three O’s. Who Owes you money? Who do you
Owe money? What do you Own?
Everyone started out as a New Construction Contractor – Your
challenges are not new.
Do you have any money left over to do what you want to do?
Wishing you the best as the Holiday Season approaches.
Sharie
In Conclusion:
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About The
Author:
https://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping
Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or sharie@fasteasyaccounting.com
I trust this podcast helps you understand that outsourcing your contractor's bookkeeping services to us is about more than just “doing the bookkeeping”; it is about taking a holistic approach to your entire construction company and helping support you as a contractor and as a person.
We understand the good, bad and the ugly about owning and operating construction companies because we have had several of them and we sincerely care about you and your construction company!
That is all I have for now, and if you have listened to this far please do me the honor of commenting and rating the Podcast www.FastEasyAccounting.com/podcast Tell me what you liked, did not like, tell it as you see it because your feedback is crucial and I thank you in advance.
I trust this will be of value to you and your feedback is always welcome at www.FastEasyAccounting.com/podcast
This Is One more example of how Fast Easy Accounting is helping construction company owners across the USA including Alaska and Hawaii put more money in the bank to operate and grow your construction company. Construction accounting is not rocket science; it is a lot harder than that, and a lot more valuable to construction contractors like you so stop missing out and call Sharie 206-361-3950 or email sharie@fasteasyaccounting.com
Thinking About Outsourcing Your Contractors Bookkeeping Services?
Click On The Link Below:
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Need Help Now?
Call Sharie 206-361-3950
Thank you very much, and I hope you understand we do care about
you and all contractors regardless of whether or not you ever hire
our services.
Bye for now until our next episode here on the Contractors Success
MAP Podcast.
Enjoy your day.
Sharie
About The
Author:
https://www.fasteasyaccounting.com/free-one-hour-consultation-bookkeeping
Sharie DeHart, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations and offers insights on how to manage the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. http://www.fasteasyaccounting.com/sharie-dehart/ 206-361-3950 or sharie@fasteasyaccounting.com
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