Working from your own garage...

[Benw455]

I say start small but keep it fun. Only work on stuff you like. Don't turn it in to a job.

 

[zmotorsports]

One way to do it is to try and get some business from used car lots. Another friend of mine who works at a Toyota dealer does a lot of that. He fills in with repair work as well, but mostly does work for used lots. Often times, they put up the funds for the cars (auctions) and the parts, and he invests in the labor. When the vehicle is sold, they split the profits. I recall one night about a year ago he did 3 head gaskets (lift and swap only) on Cavaliers. He was up until about 3:am, but got'r done.

I did this a few years ago with a so-called friend from work who was buying and selling cars on the side. I wanted to be paid for my time and materials just like any other job and he insisted we could make more money splitting the profit. Like the trusting idiot that I am I agreed and the first job went fairly well, I made out a little better than my time and materials but the next one I lost my shirt. I rebuilt a transmission and did a rear main seal on a Ford F-150 and three weeks later I was handed a check for $650.00. That just barely covered the parts and I was told that we took a beating on that one. I thought well you take the good with the bad and did another about a month later, a rear end and radiator on a late 90's Mustang that he picked up cheap. After a weeks worth of work and about $500.00 in parts I received a check for $400.00. I confronted the individual about it and again was told we took a beating. I ran into the new owner of the F-150 at the local parts store about two weeks later and asked how the transmission was working out for him. Come to find out the owner was never told about the transmission, (which I thought to be odd especially being a selling point about having a new transmission) and he told me he gave $1800.00 more for the vehicle than I was told. I confronted my so-called friend and he told me he got a couple vehicles mixed up, anyway no longer a friendship so be careful about splitting profits money makes poeple do and say things they may not otherwise do. I still do work for a couple of other small dealers around the area once in a while and charge just like a regular customer, if they make out like a bandit so be it at least I am covered on my parts and labor because after all they are taking more of the risk. I would just do the job and charge accordingly. Mike.

 

[scbird94]

Anybody run into having to take out self-employed health insurance for your family? This thread has got me thinking alot about trying to get enough clientelle that i can just work from home full time.

The biggest kicker im running into is insurance- my wife works but does not receive benifits, our entire family is on the dealership's health plan. ITs not cheap, and its very poor coverage so i cannot imagine independant coverage could be that much more?

 

[CarCrafter]

I rebuilt a transmission and did a rear main seal on a Ford F-150 and three weeks later I was handed a check for $650.00. That just barely covered the parts and I was told that we took a beating on that one. I thought well you take the good with the bad and did another about a month later, a rear end and radiator on a late 90's Mustang that he picked up cheap. After a weeks worth of work and about $500.00 in parts I received a check for $400.00. I confronted the individual about it and again was told we took a beating. I ran into the new owner of the F-150 at the local parts store about two weeks later and asked how the transmission was working out for him. Come to find out the owner was never told about the transmission, (which I thought to be odd especially being a selling point about having a new transmission) and he told me he gave $1800.00 more for the vehicle than I was told. I confronted my so-called friend and he told me he got a couple vehicles mixed up, anyway no longer a friendship so be careful about splitting profits money makes poeple do and say things they may not otherwise do. .

I hear ya. I wouldn't like the arrangement much myself, but its worked for him thus far I guess. In a similar situation, I had a guy who asked me to help him out on side gigs before where we split the labor. I didn't really care for the most part, except that I didn't think he charged enough. Either that or I was being shafted with the shorter end of the deal. Who knows. He only sold the work and did very minimal actual repair work. After a while, I just got the uneasy feeling that he knew enough to get into trouble. He kept selling flushes and so on, reminiscent of writers who didn't know ****. I'd just as soon sit on my backside then get paid $20 so he could watch me and make just as much or more. It'd be different if the guy made a concerted effort to be more helpful. I figured that sooner or later he was going to take on something that was over his head and I'd rather not be involved.

 

[e-tek]

Anybody run into having to take out self-employed health insurance for your family? This thread has got me thinking alot about trying to get enough clientelle that i can just work from home full time.

The biggest kicker im running into is insurance- my wife works but does not receive benifits, our entire family is on the dealership's health plan. ITs not cheap, and its very poor coverage so i cannot imagine independant coverage could be that much more?

Doesn't cost anything to get an insurance quote. You can do it online. It'll ask how many, ages, smoking history, etc and give you a ball park.

 

[CarCrafter]

Anybody run into having to take out self-employed health insurance for your family? This thread has got me thinking alot about trying to get enough clientelle that i can just work from home full time.

The biggest kicker im running into is insurance- my wife works but does not receive benifits, our entire family is on the dealership's health plan. ITs not cheap, and its very poor coverage so i cannot imagine independant coverage could be that much more?

All you can do is check around. When I owned a business we bought insurance though Assurant Health. We are both fairly young, early 30s and no kids, so we choose the high deductible. We rarely go to the doctor unless we have to. Having the high deductible, we also had a HSA. My wife is now the one providing us with health coverage through the school system.

I think the thing to keep in mind is whether you can afford to buy yourself insurance and simply factor that in as a cost of doing business and still come out ahead. Don't let the smoke and mirrors of 401k and health benefits fool you into thinking how much they are giving you so you should stay until your usefulness runs out.

 

[CarCrafter]

Be careful, I found out a couple of weeks ago it can get ugly quick working in a residental zone.
Long story as short as possible: I tried to help out a needy neighbor with some simple but needed car repairs, she picked the car up and insisted on giving me some cash for the labor (not much as I was not going to charge but she insisted, said she would fell better if I took it).
My other neighbors, elderly couple managed to get a picture of her giving me money and turned it all over to the city and county. The called me in and let me know that I am being watched and informed me of all the violations and fines etc.. that will happen if I am "caught" again.

In reality if I had different neighbors this probably would never have happened. It did open my eyes to the fact that it can happen.

Thank goodness I live out in BFE, ahem, boondocks. My neighbors would hardly notice since I always have projects waiting in the wings. Even so, that is sound advice considering the fact that some people are just a-holes who can't stand other people trying to get ahead in life. I do work on my neighbors' vehicles from time to time and for the most part I never charge them anything, just figured they'd help keep an eye on the place.

 

[CarCrafter]

I definitley want to retire early - about 55-59 would be do-able - and I know I'll want to do something to keep busy and pay for my hobbies. I could either do some work in my shop or work PT in a parts shop or the like. If I did any work from my shop, I definitely would only do "high-end", no time-frame resto work. I'd put it out there up front - I do it right & it'll cost ya!!

You would have to deal with people who are willing to pay for the premium service. I mean, if you are going to work from home competing with some yahoo down the street doing pad slaps for $25 an axle, you'll go nuts just dealing with the calls and haggling. That would be a total waste of time in my humble opinion.

On the hand, if your clients know what you're all about and trust your recommendations, it'll be easy. Many people are willing to pay for that service. I offer pick up and delivery by appt. Typically before I bring a vehicle back, I take it down to have it washed. It sets me back a fist full of quarters, but its a nice touch. These same people can take their car into the dealer for brakes and spend more than $600 on frt & rear and the dealer won't even wash it. I can do the same job for $400, have the car delivered, washed and cleaned, and thats using the same OE parts. They'll tell their friends, and the rest is history.

 

[scbird94]

You would have to deal with people who are willing to pay for the premium service. I mean, if you are going to work from home competing with some yahoo down the street doing pad slaps for $25 an axle, you'll go nuts just dealing with the calls and haggling. That would be a total waste of time in my humble opinion. QUOTE]


I Deal with that on the shop level ALL the time. New dive shop opened up doing $49 pad slaps with the cheapest pads on the planet. I refuse to do that with my name on the repair order. You try to explain the difference about pad quality, rotor machining, lubrication, etc, its like talking to a wall. They tuned you out when you said $125/axle for decent brake job.

Get the same thing with ******* chain stores selling what they call "tune-ups". Customer will get 6 spark plugs put in and they think they got a tune up. What about the cap and rotor? Wires? fuel filter? pcv?

I give estimate on a full tune up they already said no because for $20 less they can go to midas and get their "tune up"

Sorry for the thread jack, i know topic is not related. Had to vent when i read that statement because chain stores and rip off cut-corner jobs make me crazy

 

[Nealcrenshaw]

Excellent information gentlemen!!!

 

[CarCrafter]

Sorry for the thread jack, i know topic is not related. Had to vent when i read that statement because chain stores and rip off cut-corner jobs make me crazy

Yeah but some of our own worst enemies are in house. I've seen some techs who flag 120 hours a week consistently simply because they sell but don't perform the services they sell. Most customers don't know if you really replaced all the brake fluid or just sucked out the m/c. To me, thats worst than the cheap *** midas(s) or the $49 pad slaps.

 

[zmotorsports]

You would have to deal with people who are willing to pay for the premium service. I mean, if you are going to work from home competing with some yahoo down the street doing pad slaps for $25 an axle, you'll go nuts just dealing with the calls and haggling. That would be a total waste of time in my humble opinion. QUOTE]


I Deal with that on the shop level ALL the time. New dive shop opened up doing $49 pad slaps with the cheapest pads on the planet. I refuse to do that with my name on the repair order. You try to explain the difference about pad quality, rotor machining, lubrication, etc, its like talking to a wall. They tuned you out when you said $125/axle for decent brake job.

Get the same thing with ******* chain stores selling what they call "tune-ups". Customer will get 6 spark plugs put in and they think they got a tune up. What about the cap and rotor? Wires? fuel filter? pcv?

I give estimate on a full tune up they already said no because for $20 less they can go to midas and get their "tune up"

Sorry for the thread jack, i know topic is not related. Had to vent when i read that statement because chain stores and rip off cut-corner jobs make me crazy

I had similar problems years ago when I first started working on the side. The biggest problem I had was that people didn't think I should charge as much as the larger shops because I was just a small 'home' business. I reinforced to them that I don't charge what the other shops do because I do not have the overhead that they do, however, I made no excuses that I was not in it to do work for free. I also made it perfectly clear that ONLY the highest quality parts and supplies are used in my shop (as well as the highest level of workmanship). After word of mouth got out I really have not had any issues to speak of. I did a tune up on a guys boat a few years ago and he groaned a little about the price. I had rebuilt the carb and found it was not jetted correctly for our altitude plus noticed the timing was all over the place and rebuilt the distributor with new bushings and also fine tuned the timing and advance weights. After first trip out on the water with his family he called and told me it had never run that good. It seems people forget about the price long before the quality. He is one of my clients now that I work on everything he and his family owns. I don't try to compete with the other shops around on price like I used to because I feel the client gets a better job done at my shop than anywhere else they can go and I will not play the price war game. I try to prove that to the customer with each and every job. However, I am in a unique situation where I can lose or turn away the work I don't want to do because it is not my only source of income due to my full-time job. Currently I am trying to get more into the motorcycle/ATV and off-road (Jeeps and buggies) and that is its own little niche to tap into. Not as easy as I thought it would be. I am having to still do the daily driver repairs to fill in the gaps until I can build up the clientele in the off-road market but I am certain once a few of my jobs get out there and get seen it will be a whole different game. It is funny how much money people will spend on their toys but moan and groan about a brake job or tune-up on their vehicle that gets the wife and kids around safely everyday. I would much rather work on the toys than the daily drivers. Mike.

 

[gahrajmahal]

I registered as a L.L.C. (limited liability corporation) so that all work I do is separate from the "personal" me. I am the managing member, no employees. This puts a layer between you and your customers should there be a disaster etc. I really enjoy putting together stuff for my own amusement then selling it on EBay, craigs list etc. That way I can work at my own pace and control the costs better. EBay sales is where the Gahrajmahal name came from. My L.L.C. is called Pontus. I was going for a no-name like Kodak.

 

[SteveP]

I too have been considering this for quite some time; not so much as a full time gig but the weekend stuff. The one thing that scares me was touched on in an earlier post, and would like to hear your opinions on this: what happens when you forget to tighten the (blank), the (blank) falls off and the customer crashes into a bus load of kids? Working at a dealership, the owner has the insurance for that (I assume!!) but what about the home based weekender? It certaintly isn't worth losing my house for.

 

[CarCrafter]

I too have been considering this for quite some time; not so much as a full time gig but the weekend stuff. The one thing that scares me was touched on in an earlier post, and would like to hear your opinions on this: what happens when you forget to tighten the (blank), the (blank) falls off and the customer crashes into a bus load of kids? Working at a dealership, the owner has the insurance for that (I assume!!) but what about the home based weekender? It certaintly isn't worth losing my house for.

I think it depends on how comfortable you are and how far you want to go in regards to protecting yourself. First and foremost, no matter if you work from home or at work under someone else' banner, you should want to do your best to make sure something like that doesn't happen. Sometimes, that means going over EVERYTHING you touched or think you may be accused of. Carelessness is carelessness no matter who has to shoulder the brunt of the screw up, your employers or yourself. Double check your work and don't become distracted. Aside from that, you can always look into forming an LLC (Limited liability company). It really doesn't cost that much to do and much of it can be done right from home without an attorney. Although if you want to seek the guidance of an attorney, you can. Some guys make do under a shade tree accepting cash under an assumed name. So, you really have to ask yourself how far you want to go with it.

 

[scbird94]

I too have been considering this for quite some time; not so much as a full time gig but the weekend stuff. The one thing that scares me was touched on in an earlier post, and would like to hear your opinions on this: what happens when you forget to tighten the (blank), the (blank) falls off and the customer crashes into a bus load of kids? Working at a dealership, the owner has the insurance for that (I assume!!) but what about the home based weekender? It certaintly isn't worth losing my house for.

Quite simply, you just dont let that happen. You will be screwed. If you dont feel comfortable enough to trust your workmanship, its best to shy away from doing work with your name on it directly.

I realize mistakes happen. Thats why even while im at work, every thing is double checked. EVERY vehicle i work on gets a "flashlight inspection" after my test drive and before i lock it and bring the keys in for the customer.

Shine under can, look for leaks, quick flashlight into wheels to check caliper bolts, i have even walked around and kicked tires to check for loose lugs. Has not failed me yet, have no had one comeback due to loose anything.

While i am doing this final walkaround, you wouldnt beleive how many sockets, wrenches, screwdrivers, etc i have found on wiper cowls and under dashboards that i almost lost.\

Shop environment can be very hectic, always best to double check work to ensure no mistakes.


I have kicked myself for taking on a side job where i broke something and had to pay for it (at work boss has to buy). Only happend once and cost me about $15 so good so far. These items can include plastic connectors, door panel trip peices, etc. jb weld is a lifesaver but sometimes you just gotta shell out cashola :-(

 

[scbird94]

Called the city today curious about the restrictions of a home-based business. Auto/Boat/motorcycle repair is a no-no in a residential single family homestead setting according to city code. Minnesota state law says you cant "spot-zone" and the lady at city hall seemed to think there was no way around it.

So i wonder if i just make my home business legit and say screw the city? dunno what happens if they find out? All my neighbors are cool and i work on their stuff (for money) so i dont worry about them.

Anybody ran into this? There has GOT to be a way to do this! Its my freaking house, garage, yard and driveway why do they have the right to tell me i cant fix cars?

 

[CarCrafter]

I don't have that problem fortunately because I am out in the boonies. I'll bet that if someone did report me though, I'm in the same boat as you guys. One way to combat that could be doing some of the work "on scene" at their home or work. Given that could be difficult in the Northern climates come winter time with blowing snow and wind chill, but its something to consider. Just because you can't legitimately operate a shop biz in your garage openly, doesn't mean there is someone out there to police it and enforce it. I'd say that so long as your neighbors are cool and nobody reports you, how would they know? Don't get flagrant and have 8 cars sitting on the front lawn in various states of disrepair, that would be asking for it. I mean, how can they tell if you are working on your friends or relatives vehicles? I would shy away from having jobbers deliver. Just give yourself an excuse to pick up lunch at the same time and factor your time into the repair bill. That is how I have done it thus far. I have an LLC, business cards, commercial level purchasing power, I print ROs and invoices. The next step for me is getting a tax id, but I'll hold off until I want to make it official.

 

[econoaddict]

So i wonder if i just make my home business legit and say screw the city? dunno what happens if they find out? All my neighbors are cool and i work on their stuff (for money) so i dont worry about them.

Anybody ran into this? There has GOT to be a way to do this! Its my freaking house, garage, yard and driveway why do they have the right to tell me i cant fix cars?

The worst case ending as explained to me was losing the house/property as well as possible fines/jail time.

 

[sasquach]

I had a neighbor who was doing this . The only problem was ther flat bed picking up and dropping off cars twice a week

 

[SteveP]

Quite simply, you just dont let that happen. You will be screwed. If you dont feel comfortable enough to trust your workmanship, its best to shy away from doing work with your name on it directly.

I realize mistakes happen. Thats why even while im at work, every thing is double checked. EVERY vehicle i work on gets a "flashlight inspection" after my test drive and before i lock it and bring the keys in for the customer.

Shine under can, look for leaks, quick flashlight into wheels to check caliper bolts, i have even walked around and kicked tires to check for loose lugs. Has not failed me yet, have no had one comeback due to loose anything.

While i am doing this final walkaround, you wouldnt beleive how many sockets, wrenches, screwdrivers, etc i have found on wiper cowls and under dashboards that i almost lost.\

Shop environment can be very hectic, always best to double check work to ensure no mistakes.


I have kicked myself for taking on a side job where i broke something and had to pay for it (at work boss has to buy). Only happend once and cost me about $15 so good so far. These items can include plastic connectors, door panel trip peices, etc. jb weld is a lifesaver but sometimes you just gotta shell out cashola :-(

Oh believe me I am VERY **** about that- double, triple, quadruple check everything- but yet I have seen it happen, by very competent journeymen yet. Also, what about something out of your control; that reman master you put on yesterday fails. Made sure I did everything correctly, but the part failed. Who gets sued then?

I like the idea of an LLC, but how is that done? Do you need a business license/tax ID number/whatever or is this something you can put under your name and address only?

 

[CarCrafter]

I like the idea of an LLC, but how is that done? Do you need a business license/tax ID number/whatever or is this something you can put under your name and address only?

There are limitations even if you operate under an LLC. It doesn't give you a license to be inept, if you catch my drift.

As far as forming an LLC, its pretty straight forward. You can google that online and find much of the information. Some companies like US legal forms offers a whole kit you can buy, print, fill out and mail. Or other kits where they charge a bit more for filing it for you. Check with your secretary of state's office. Its really not all that expensive, but that varies from state to state.

Many of these forms can be found for free, so if you do some digging, you can just download them, file & pay.

 

[babzog]

Called the city today curious about the restrictions of a home-based business. Auto/Boat/motorcycle repair is a no-no in a residential single family homestead setting according to city code. Minnesota state law says you cant "spot-zone" and the lady at city hall seemed to think there was no way around it.

So i wonder if i just make my home business legit and say screw the city? dunno what happens if they find out? All my neighbors are cool and i work on their stuff (for money) so i dont worry about them.

Anybody ran into this? There has GOT to be a way to do this! Its my freaking house, garage, yard and driveway why do they have the right to tell me i cant fix cars?

How about a for-pay "inspection" service, with free repairs as required? The biz is inspections... that they might cost tens, hundreds or thousands of dollars, well, that just shows the potential profitability of your business model, doesn't it? Being that you can't in good conscience let the vehicle leave without being properly repaired, post-inspection, you offer to fix it for free!

 

[SteveP]

There are limitations even if you operate under an LLC. It doesn't give you a license to be inept, if you catch my drift.

It's not a matter about being inept, but C'n my A, if you get mine

 

[CarCrafter]

There is no way one can ever completely cover one's six. I mean, some itchy lawyer will find some loophole somewhere somehow to penalize you one way or other if given the chance. He or she will bring to bear the full weight of their law firm and our criminal justice system to ensure that you are ripped from your loved ones and auction off everything you have ever touched.

On the other hand, there are meth labs, ***** houses disguised as massage parlors, drug dealers, child molesters and murderers and whatever else out there.. the odds that they make an example out of you on the six o'clock news before they nail the others is _________________ ? I guess it all depends on how lucky you feel.

 

[SteveP]

I guess it all depends on how lucky you feel.

With my luck, I would be on Nancy Grace!!!!

 

[e-tek]

I don't mind at all that this thread got WAY off topic - as it appears many of you mechanical-types have much to disucss! And I'm learnign a lot about your trade too!

But just to know - what I'm talking about doing in my shop is "High-End Restorations" of classic cars. Many of you have seen my Challenger build on here. I've done many others. All show winners. I won't be doing brakes for drivers, but more like turning rust buckets into "as delivered". Just thought I'd clarify, so that when I said I'd only do top-end work and charge through the nose for it, I don't mind the type of customer that brings. Hell, I AM one of those types!

Like I said earlier, I put an ad online stating just that. Got lots of replies, lots of "estimates please" and the like and whitled it donw to 2 guys who want "full-meal-deals", "money-is-no-object" on cars they own. One is a 70 Road Runner and the other a 69 Elan.CArs I'd love to work on - espicially for $75 an hour!

 

[tdkkart]

The one thing that scares me was touched on in an earlier post, and would like to hear your opinions on this: what happens when you forget to tighten the (blank), the (blank) falls off

Back when I was in electronics school I rented a room in a woman's basement. As soon as she figured out I could work on cars and do other odd jobs I was working off my rent money on her car, her house, and her kid's POS vehicles.

I put a re-man starter on her tank Oldsmobile one day, she paid me for the part and gave me credit for the week's rent.
A couple night's later her son comes downstairs and hands me the phone, on the other end is her older son, say's "mom was in a minor accident, now her car won't start and they found the starter on the street."

HUH?? WTF?? How the hell did that happen?? Fer christ sake, how could I f^&k up replacing a Chevy starter??

Oh well, I drive over to where she's parked to see what's up. She peeved, pulls an old grease encrusted starter out of her back seat, "is this the starter you put on, somebody said you screwed me, yada, yada, *****, *****!!"

WHOA, wait just a damned minute here, where that starter come from??
She says "they found it laying in the street after the wreck and now my car won't start, they told me it was my starter."

Just a minute.
Walked around the front of the car, throw the hood up and find the battery laying on it's side down on the frame with the ground cable pulled out of one of them POS clamp on cable ends.
Got some tools from my trunk, patched up the cable, put the battery back where it belonged, and fired up the car and sent her on her way without saying a word.

The next day she came and profusely apologized for making any kind of accusations, and explained that the starter they found had probably fallen out of the back of the old junkhauler truck that she had rear-ended.

 

[Jaguar Fan]

Same folks that run into their doctor at Taco Bell and bug 'em for a free diag about the latest problem area. When you do stuff for $, you have to set some rules...

There's the old story about the Doctor and Lawyer talking to each other at a party.

At some point, the Doctor says "Its amazing. I run into people at the store, at restaurants, even at parties and they are all bugging me for a diagnosis. I want to be nice & friendly, but I don't really know how to handle inquiries where they really should come in for a paid office visit. Well, you're a Lawyer, you probably get the same thing with people asking you for free legal advice. How do you handle it?"

"I always send them a bill in the mail for legal services the next day."

The next day, the Doctor got a bill in the mail from the Lawyer for legal services.

 

[CarCrafter]

I don't mind at all that this thread got WAY off topic - as it appears many of you mechanical-types have much to disucss! And I'm learnign a lot about your trade too!

But just to know - what I'm talking about doing in my shop is "High-End Restorations" of classic cars. Many of you have seen my Challenger build on here. I've done many others. All show winners. I won't be doing brakes for drivers, but more like turning rust buckets into "as delivered". Just thought I'd clarify, so that when I said I'd only do top-end work and charge through the nose for it, I don't mind the type of customer that brings. Hell, I AM one of those types!

Like I said earlier, I put an ad online stating just that. Got lots of replies, lots of "estimates please" and the like and whitled it donw to 2 guys who want "full-meal-deals", "money-is-no-object" on cars they own. One is a 70 Road Runner and the other a 69 Elan.CArs I'd love to work on - espicially for $75 an hour!

Sorry bout hijacking your thread there E-tek. I understand the type of work you do and have admired it from a far for quite some time now. I still think much of the information we've been discussing would still apply to your market as well. People with money to spend are still human beings unfortunately. When things are going well, you could get away with no liability insurance, no LLC or anything. I wish it was as simple as handing over cash for services provided. Granted you get to be more choosy on who's projects you decide to work on. Yet still, you can't predict the human element. Their 16 y/o kid takes dad's ride out for a spin, goes across the median and kills someone. The family might not blame you knowing full well it was their pot head kid's fault, but the other parties' attorney is foaming at the mouth and he is after everyone cause he wants a larger chunk of that 33.3% and he finds out somehow that you built the car and your net worth is what? Can you afford that kind of negative publicity? Even if the accusations are unfounded, you'd still have the expense of hiring an attorney to defend you against a civil law suit. I guess in that instance, it might make more sense to buy/ build/ and sell AS IS. I guess you can't let fear of that simply drive you insane and keep you locked up in the bomb shelter forever. I wonder if having some sort of contract drawn up that limits your legal responsibility would help. An attorney would be better able to answer that. By all means I say GO FOR IT.

 

[Jaguar Fan]

Anybody run into having to take out self-employed health insurance for your family? This thread has got me thinking alot about trying to get enough clientelle that i can just work from home full time.

The biggest kicker im running into is insurance- my wife works but does not receive benifits, our entire family is on the dealership's health plan. ITs not cheap, and its very poor coverage so i cannot imagine independant coverage could be that much more?

I asked a friend of mine last night. He says his little company at one time had 5 partners, so they were able to purchase a group policy (high deductible). They are down to 2 guys now but they still get to have the group policy.

Apparantly group policy costs a lot less than individual...

 

[porschedude996TT]

I have been doing favors for family and friends since I was about 14YO. A carburetor rebuild, repair a dysfunctional automotive window controller, computers, lots of computers…Replaced the dorked up electrical system in my nephews ’67 Camaro, Installed disk brake system in the same ’67. All of it for free. What really gets me is the computer work. I have grown to hate working on them. I would rather get my hands dirty and get off the keyboards. I live on a keyboard at work and that is enough. I do enjoy conversing and commenting here on the forum at night or when it is slow…
My plan when I retire is to start a small fabrication shop in the area and pick and choose the work that I will take on.

 

[pcmeiners]

"Anybody run into having to take out self-employed health insurance for your family?

Get online quotes, but it's a bit tricky... last year I changed insurers and got a provider off of EHeathInsurance. If you have a number of employees not bad, but if you are the sole employee it is harder to get a policy or a decent rate. Then you play the insurance increase game, stay with any one provider more then 2 years, and they increase your rate >25% per year. My last insurer was GHI, on the 3rd year they wanted to increase me from $425 to $650 (I'm single, NYC, rarely hit a doctors office), now I have Atlantis at $389.00

An entity for protection....

Forming a legal entity for protection is easy but maintaining it is not. I used to do all the paper work involved, all the taxes, not easy... you have disability insurance, unemployment insurance (which I can not collect as shareholder,ever), liability insurance if you choose, payroll, quarterly reports, yearly reports. Personally I have city, state and Federal tax returns for my ChapterS, all have deadlines, with juicy fines if not meet. Make a small mistake on anything going to the government, including a missing check mark, will cost you. Then there are the nonsense audits... got hit with one because a client sent the government a 1099 with a check mark in the wrong box, caused me 5 trips to the IRS to straighten out (5 days lost).
The paper chase is so demanding I now use a payroll service and accountant to preserve my sanity. An accountant is not cheap, but saved me from two nonsense audits so far.
NY state is the worst, costs me $400/yr for the ChapterS state/city fee, and I dare not send anything to them without a return receipt, or it hits the garbage can... they wait 2-3 years, then they levy fines and penalties for the "missing" required form.. of course this is with compounded interest. Know what you getting into.

 

[e-tek]

Sorry bout hijacking your thread there E-tek. I understand the type of work you do and have admired it from a far for quite some time now. I still think much of the information we've been discussing would still apply to your market as well. People with money to spend are still human beings unfortunately. When things are going well, you could get away with no liability insurance, no LLC or anything. I wish it was as simple as handing over cash for services provided. Granted you get to be more choosy on who's projects you decide to work on. Yet still, you can't predict the human element. Their 16 y/o kid takes dad's ride out for a spin, goes across the median and kills someone. The family might not blame you knowing full well it was their pot head kid's fault, but the other parties' attorney is foaming at the mouth and he is after everyone cause he wants a larger chunk of that 33.3% and he finds out somehow that you built the car and your net worth is what? Can you afford that kind of negative publicity? Even if the accusations are unfounded, you'd still have the expense of hiring an attorney to defend you against a civil law suit. I guess in that instance, it might make more sense to buy/ build/ and sell AS IS. I guess you can't let fear of that simply drive you insane and keep you locked up in the bomb shelter forever. I wonder if having some sort of contract drawn up that limits your legal responsibility would help. An attorney would be better able to answer that. By all means I say GO FOR IT.

That's some DAMN good advice. I hear ya.

 

[Jaguar Fan]

There are limitations even if you operate under an LLC. It doesn't give you a license to be inept, if you catch my drift.

As far as forming an LLC, its pretty straight forward. You can google that online and find much of the information. Some companies like US legal forms offers a whole kit you can buy, print, fill out and mail. Or other kits where they charge a bit more for filing it for you. Check with your secretary of state's office. Its really not all that expensive, but that varies from state to state.

Many of these forms can be found for free, so if you do some digging, you can just download them, file & pay.

To protect yourself on an ongoing basis you need more than just forms. It is a whole way of operating the LLC to keep it truly separate from yourself, thereby keeping the liability shield as strong as possible.

Let's say your LLC does some work for me & there is a problem & I sue you. I won't just sue the LLC; I'll sue you (the person), too. You'll say "it wasn't me; it was the LLC" and I'll say a bunch of things the end result of which is I'm trying to convince the judge that you (the person) should be on the hook too even though there is a valid LLC in place.

In Legal terms, I will attempt to "Pierce the Corporate Veil" to get your personal assets on the hook.

See http://en.wikipedia.org/wiki/Pierce_the_corporate_veil.

For the kinds of small businesses everyone is discussing here -- fixing cars & fabbing out of your home garage -- piercing the corporate veil would be relatively easy (not a slam dunk; just relatively easy).

I'd probably rely on the "undercapitalization" doctrine.

Basically I'd say to the judge "yeah, he has an LLC. So what. It doesn't have any significant assets to speak of. But the person who owns the LLC - he has a house & car and tools and savings accounts. That LLC is just a cynical way for him to segment off the risk while he still gets the full benefit of all the income. He works out of personal garage, with mostly personal tools! Clearly the person should be included in the lawsuit."

Summarized in Wikipedia:

* Minton v. Cavaney 56 Cal. 2d 576, Mr Minton's daughter drowned in the public swimming pool owned by Mr Cavaney. Justice Roger Traynor in the Supreme Court of California held "The equitable owners of a corporation, for example, are personally liable... when they provide inadequate capitalization and actively participate in the conduct of corporate affairs."

* Kinney Shoe Corp. v. Polan 939 F.2d 209 (4th Cir. 1991) the veil was pierced where its enforcement would not have matched the purpose of limited liability. Here a corporation was undercapitalised and was only used to shield a shareholder's other company from debts.​

You'd sit there stammering saying "that's not the way it is supposed to work -- I set up this LLC to protect myself" and I'd say "yeah! exactly! you set up the LLC to protect your personal assets; you didn't set up the LLC to truely be a separate corporation that looks and feels and operates like a separate corporation."

Or I might go after the co-mingling of assets doctrine (personal tools and tools that belong to the LLC) or failure to keep appropriate records, etc.

Not to derail the thread -- but for those of you who have set up LLCs or are thinking about it, it is probably worth buying an hour or two of a lawyer's time. Spend the first half of the meeting asking him about horror stories where the LLC didn't shield the person. Then spend the 2nd half of the meeting asking what the lawyer can do to help protect you.

LLC is the right idea - you just have to do it right and also operate the LLC right.

Here are a couple other links to look at if you get serious:

http://www.rjmintz.com/piercing-the-corporate-veil.html

and

http://www.llc-made-easy.com/piercing-the-corporate-veil.html


Of course the first step is not to get sued in the first place. But if you do, and if you've done *everything* right about operating the LLC, there is only about a 2/3 chance your LLC will shield you.

And, let's say you did *absolutely nothing* right - you still have about a 1/3 chance of the LLC shielding you.

Its all up to the judge, and there isn't a whole lot of consistency out there, and the implementation of course varies by state.

 

[CarCrafter]

Thanks.. thats pretty much what I've been getting at as well. Even behind the LLC, they can still reach in and come after you if given the opportunity. I mean, you can own and operate the LLC, but if you happened to be the guy who "put on the wheel in question" that fell off while they were on the road, you are still personally liable and they can argue negligence. One of the things you may want to do then is not work on the vehicle yourself, and have your staff do it, that extra layer of distance. Also, make sure you buy a large enough umbrella policy to cover yourself/ assets. By then of course, you'll be a legitimate business and your overhead is so high that your charges are just as high as everyone else because you had to cover your six.

Not to come off sounding like a nut job, but as I said before there are ***** houses, meth labs, terrorists, murderers, child molesters, how high do we rank up there as far as being a problem. Although there is always that small chance we get nailed, and that one time is the only time that'll count.

 

[StingRay]

And remember e-tek in in Canada. Legalities can be different.

 

[gahrajmahal]

My L.L.C. was set up by a trusted law firm, cost me about $1000. For that they listed my business with the state of Ohio. I opened a checking account with my new state issued tax I.D. number. Business cards and checks had the business name on them. I filed my taxes quarterly. If I worked in a township that had city taxes, I paid them quarterly (ask the folks you are working for if they pay them). In the U.S. you have to pay social security, not only the 7% a regular employee pays but also the 7% the employer pays for a total of 14%. So, what I usually did was bank 50% of whatever I was paid and the other 50% I could spend on food & shelter etc. I never had a problem that resulted in legal action, but I would have to imagine that if I did, it would look better that I was payin my taxes. Your $75 hr. labor is going to be reduced pretty fast with everyone in your pocket. If you buy the cars yourself and bankroll the restoration yourself. Register them in your name, I think you could get away with selling at least two cars a year without raising suspicion. If you are doing high dollar cars that go to auction, I think you could get closer to your preferred hourly rate and without all the potential legal hassles.

 

[limerick]

My L.L.C. was set up by a trusted law firm, cost me about $1000.

Ok fellas, I'm not a lawyer, nor do I play one on TV. I do however listen quite
regularly to a financial show, who has one as one of the 'host's' team members. He
is a tax lawyer and what he has basically said is that the LLC or Corporation is
of no value whatsoever, IF you are the person providing the service. Example:
Doctor who operates on you, Accountant who gets you jacked up with IRS, mechanic who turned the wrench on the car that killed a pedestrian. If there is
provable negligence, and you personally provided the service - there is literally
no personal protection from liability judgments. (now that's not to say that
certain assets are not exempt from a judgment creditor, such as pension plans,
homestead exemptions on personal residences, etc)

 

[limerick]

on another slightly different note, if one does enough business to make it worth-while to setup a corporation, such as a sub-chapter S corp, and
institutes a defined benefit plan, one can set aside a fair amount each year, tax deferred for retirement as well as taking a 'dividend' which as a corporate
officer, is not subject to a 15+ percent FICA tax, thereby saving a nice little chunk
of change there too. Of course, don't make the 'dividend' amount out of
bounds so to speak... like a $10K salary and $50K dividend.. the IRS would
look highly askance at such a scenario... LOL!

btw, I love perusing these various forums and threads as I'm a metal
worker in both hobbies and some professional senses as well. What provoked me
to join and subsequently jump in on this thread though was all the false assumptions
regarding how LLC's and Corps will give you all this protection.. when depending
on per case circumstances, they may well not. Just sayin...