Business side of detailing (taxes, laws, etc)

[Sprzout]

So I'm thinking of starting up my own detailing business, as it looks like the dept I'm working in currently at the cable company might get moved somewhere out of state...If that happens, I'll just start up a detailing business here in So Cal rather than end up living in the middle of nowhere.

But, here's some of the issues I'm having with startup:

- Getting a business license (how do I classify the business, since it'll be mobile?)

- Do I need insurance or legal protection in case a customer tries to sue me for what they consider are damages to their car (i.e. they think I put scratches into the paint when I simply discovered it in the process of washing the dirt off the car)

- Laws and city ordinances regarding water usage & reclamation/runoff

Are any of these things that most of you pros have had to deal with? I would imagine I'd have to go through the San Diego County offices to get the business license, but I haven't the foggiest of what I have to do with taxes, or business license fees, or anything like that...Anyone have any suggestions as to where I should start? If I can get pointed in the right direction, I can take it from there, but I don't even know whether these are things I really need to stress about too much (like the water reclamation issues).

[AeroCleanse]

Re: Business side of detailing (taxes, laws, etc)

Start with the state and federal government. If you go to the small business administration website it should help you start. SBA.GOV

[Executive Detailing]

Re: Business side of detailing (taxes, laws, etc)

I went to City Hall, and got the business license. ($30). I used my home address as business address, as I am mobile too.

Then went online, and got my Fed Tax ID# (free)
Then I went to the state, and got my sales tax certificate (free)
but you should get business insurance!!! I was told check out State Farm, but they do not have a good track record in NY.

[Sprzout]

Re: Business side of detailing (taxes, laws, etc)

I went to City Hall, and got the business license. ($30). I used my home address as business address, as I am mobile too.

Then went online, and got my Fed Tax ID# (free)
Then I went to the state, and got my sales tax certificate (free)
but you should get business insurance!!! I was told check out State Farm, but they do not have a good track record in NY.

Well, I've got a State Farm insurance agent here that I'll probably go in and talk to - the guy's a car nut himself and will probably understand what I'm going after. Who knows, maybe he'll be able to steer me into some clients!

Thanks for the tip about business insurance, as I wouldn't have thought about that.

[Executive Detailing]

Re: Business side of detailing (taxes, laws, etc)

Business insurance should cover you if you have pre-paid customers, and you end up closing up shop.
It should also cover you for liability, just in case you damage a car, short out a plug, and burn down their house, rip the seats, break off antennas, back into a rock wall, drive off a cliff, alien abduction, car jacked by topless vixens, you know- every day hazards

[3Fitty]

Re: Business side of detailing (taxes, laws, etc)

Sprzout,

A few things...

1. If you plan on starting a new business, meaning a "real business", you have to start with some basics, like a name. Why I mention this is because you'll have to first check your State's Corporate name directory to ensure you are not using someone's name or a name that is nationally (or internationally trade marked). For example, if you tried to be cute and open a business called Sprzout-Meguiar's detailing service, you'd get a cease and desist letter from Meg's pretty quick (unless you were paying for use of their name). You probably couldn't even do this if your name really was Meguairs. LOL

2. Once you've got your name picked out (and is available), incorporate yourself. This is an important step (I think) to protect against personal liability. Lets say this detailing this really starts to roll for you and within a year you have two guys working for you. One of them decides he is going to buff Mr. Smith's car using a buffer he knows has frayed wires and presents a risk of electric shock. Mr. Smith grabs said wire and gets electrocuted. If your entity is a corporation, you are protected from having Mr. Smith take your home and car. Only business assets are at risk (unless he pierces the corporate vale - but that is another story).

3. Incorporating shouldn't be too expensive. You probably could do it yourself and should be less than $500.

4. Purchase liability insurance. It won't be expensive and it will protect your business.

5. Make sure you comply with worker's compensation insurance laws. These vary from State to State, but I think it is important you comply with them.

6. As a corporation, you expose yourself to possible double taxation... although I need not go into what sole proprietors can do to avoid this...lol

7. My experience with insurers is that they are all pretty much the same (except for Countrywide). None are very good. Most are pretty bad, Countrywide is nearly criminal.

If I think of anything else, I'll let you know.

[Sprzout]

Re: Business side of detailing (taxes, laws, etc)

Sprzout,

A few things...

1. If you plan on starting a new business, meaning a "real business", you have to start with some basics, like a name. Why I mention this is because you'll have to first check your State's Corporate name directory to ensure you are not using someone's name or a name that is nationally (or internationally trade marked). For example, if you tried to be cute and open a business called Sprzout-Meguiar's detailing service, you'd get a cease and desist letter from Meg's pretty quick (unless you were paying for use of their name). You probably couldn't even do this if your name really was Meguairs. LOL

2. Once you've got your name picked out (and is available), incorporate yourself. This is an important step (I think) to protect against personal liability. Lets say this detailing this really starts to roll for you and within a year you have two guys working for you. One of them decides he is going to buff Mr. Smith's car using a buffer he knows has frayed wires and presents a risk of electric shock. Mr. Smith grabs said wire and gets electrocuted. If your entity is a corporation, you are protected from having Mr. Smith take your home and car. Only business assets are at risk (unless he pierces the corporate vale - but that is another story).

3. Incorporating shouldn't be too expensive. You probably could do it yourself and should be less than $500.

4. Purchase liability insurance. It won't be expensive and it will protect your business.

5. Make sure you comply with worker's compensation insurance laws. These vary from State to State, but I think it is important you comply with them.

6. As a corporation, you expose yourself to possible double taxation... although I need not go into what sole proprietors can do to avoid this...lol

7. My experience with insurers is that they are all pretty much the same (except for Countrywide). None are very good. Most are pretty bad, Countrywide is nearly criminal.

If I think of anything else, I'll let you know.

Thanks! I've already done my research on the name and everything, and found it's available at this point & time; I've even got a web address that would be available if I wanted to go that route (which would probably make sense - cheap advertising, I can educate people with before & afters online without having to print out fliers to show the same thing, and I can simply refer them to a web address which would have all of my contact info, prices, ways to schedule an appointment, etc.)

As for the insurance, I hadn't thought about that until it was mentioned earlier in the thread. I've kind of talked with my State Farm agent to see what insurance would be recommended for what I'd be looking at, and what it would cost...Again, trying to get numbers down in a ballpark so that I can see how much money I'd be risking in starting up this business.

I've also been trying to look at laws regarding water usage in my area (apparently, San Diego County has restrictions on pressure washing, and you need to use a reclamation system; however, the loopholes in this are that if you use a hose with a trigger spray and a bucket, you can do it without needing a reclamation system - at this time), the cost of running a generator, gas to travel to a customer's residence, materials that I might need, etc. I'm not sure I would need to be too concerned with worker's Comp insurance at this time, but that's primarily because I'd be the sole proprietor and employee of said business...I've got a lot that I've been thinking about. I want to have as many of my ducks in a row as possible before I decide to do this as a real business.

And let's face it, San Diego County is a great place to have a business like this; the weather's nice pretty much year round, so I can do a lot of detailing and won't have too much loss of business by things like winter storms, and Southern California in general is full of people who drive cars. It's not like New York, or Chicago, where there's a larger culture of people who ride public transportation.

[3800rs]

Re: Business side of detailing (taxes, laws, etc)

did you ever get a price for insurance ?

[Mr Mustang]

Re: Business side of detailing (taxes, laws, etc)

+1 to everything 3fitty said, I'm a business major, and I believe he covered everything. I might also suggest starting out detailing on the weekends, as alot of times people start out going at their business strong, and then start losing interest. And the sad fact is that within the first year nearly 75% of small businesses fail, I hope this wont be you, but try to start out slow. You'll also want to find a decent accountant for your tax stuff, and keep all your receipts, the IRS likes looking at new businesses, especially if they are successful.

Good luck, and nice avatar, the S197's are awesome!

[J. A. Michaels]

Re: Business side of detailing (taxes, laws, etc)

Good luck and heres hoping your business is very successful.

[Deaner5]

Re: Business side of detailing (taxes, laws, etc)

You'll also want to find a decent accountant for your tax stuff, and keep all your receipts, the IRS likes looking at new businesses, especially if they are successful.

As an accountant I will add a little to this. As far as taxes, make sure you keep good track of your expenses and income as they will help come tax time. Keeping good records will help track everything not only to help with taxes but also help you take a look at how the business is doing.

At a recent Continuing Professional Education class that I attended the teacher was telling us about how the IRS is not only looking a little more at new businesses but specifically new businesses that the owner is just looking to write off their personal expenses. An example that she gave was how a person started a boat/yacht fishing trip guide thing but he never went full force into it and mearly took things for a write off even though it was more personal since he wasn't actually in the business. So there is that fine line that you cross from business to personal which is also a good reason to keep things seperate.

[Sprzout]

Re: Business side of detailing (taxes, laws, etc)

As an accountant I will add a little to this. As far as taxes, make sure you keep good track of your expenses and income as they will help come tax time. Keeping good records will help track everything not only to help with taxes but also help you take a look at how the business is doing.

At a recent Continuing Professional Education class that I attended the teacher was telling us about how the IRS is not only looking a little more at new businesses but specifically new businesses that the owner is just looking to write off their personal expenses. An example that she gave was how a person started a boat/yacht fishing trip guide thing but he never went full force into it and mearly took things for a write off even though it was more personal since he wasn't actually in the business. So there is that fine line that you cross from business to personal which is also a good reason to keep things seperate.

That, trust me, would not be a problem. I've already started keeping receipts for all of my materials purchases, I've thought about getting a separate cell phone # for said business (cell phone would be ideal, because that way I can put it on business cards for contact, and if I'm at a job I can schedule the appt over the phone, then put it into my cell phone/PDA & download it later when I get home).

I've also talked with my local banks & credit union for having a separate account for the business, to simplify accounting and taxes at the end of the year. That way, I can make purchases in the business name, through that account, so that if/when I get audited, I can show the income & expenditures for a CYA.

And, I keep a logbook for mileage already in my car, so that I can calculate my MPG; a second logbook for miles traveled for the business on mobile detailing would be very easy for me to track.