Alright, as some of you know I've been detailing cars with sort of an impromptu mobile car detailing business, got a website and everything. In January I had 2 jobs that made me about $430, so I got to thinking that maybe I should make this legitimate (register the business as sole proprietorship, get tax ID number, E&O liability insurance), and start advertising and trying to work as much as possible. I think from Jan-08 to Feb 09 I made about $2000 from word of mouth alone, neighbors and their friends and what not. No advertising.

I'll go ahead and list the obvious pro's of why I should make it legitimate:
- It will be legal.
- I can advertise without worrying about legal issues, and in theory get more customers
- I would be insured incase I mess something up on someone's car (not likely, but good to have)


The cons:
- Pay for income, self-employment taxes, and insurance
- self-employment tax is 15.3%
- Taxes taxes taxes

Then the pro's and cons for not registering a business..
pros:
-cash in pocket
-no taxes to deal with

cons:
-fines by the IRS for operatng an unregistered business, and other legal penalties that I wouldn't be able to afford.
-can't safely advertise around the area (flyers/business cards in stores, banks, craigslist ads, phonebook, etc)


The thing is, I'm a dependent living at home, not paying for my own medical/health insurance, and going to college with no loans or debts. I'm also looking for a job where I can work evenings, as I don't have one right now.. But essentially I'm not paying any bills at the moment..

 

IF that is what you want as your career, then do it. otherwise...keep it between you and friends/family.

 

You'd have to have E&O + General Liability + pay taxes + all of your advertising costs...

I'd keep it on the D/L and just keep using word of mouth. You're just a "kid" cleaning cars "in your parents driveway." Just don't wash any IRS agents' cars..

 

I would just keep doing it on the side. Word of mouth is the best advertisement in some cases so just keep doing what your doing.

 

 

Do not set it up as a legit business unless you are going to do it for a career. Trust me been there done that ****. It's a pain in the *** for a side job deal like I used to do it for.

 

Who was right?

 

Keep it off the radar and keep all your hard earned money.

 

Could some of you provide reasons as to why not to do it? I would plan on doing this for atleast 2-3 years.

 

It's up to you really, you're going to spend several thousand dollars a year for your insurance alone, I would speculate between $2-3,000/yr + handing over a good chunk of money to the government. You'd probably need to be bonded as well which would cost you anywhere between $3-500/yr. Your overhead cost could be $5-7,000/yr +/- depending on how much business you have not counting your cost of materials. If you feel like you could gross $25,000+ easily then I'd say go for it, otherwise I'd just continue to use word of mouth, you can still advertise with a business card, web site, etc. you just wouldn't be an 'incorporated' business..

Personally, I'd just spare the trouble, type up a waiver of liability and have each of your "clients" sign it before every detail spelling out the fact that if anything should happen they could not hold you liable for any damages.

JM2C...

 

I think your numbers are a bit off..liability insurance usually isn't over $100 /mo. I could operate w/o insurance so that my only fees would be taxes&expenses, both of which are directly dependent on how much business I would have, so if I worked little, I would pay little, vice versa. Not really seeing any way I could lose money off this, unless I didn't keep track of income and didn't have the money come tax time. I already have enough detailing crap in the garage/my closet to fully clean about 30 cars before it would need to be replenished, so I wouldn't be starting off with many expenses besides registration fees & advertising.

I mean, you're probably right that it would be much easier to just keep it off the grid and do it here and there, but I'm real attracted to the idea of going into business for myself, just to have the experience of doing it. Cause y'know, I started doing this when I was 17 and caught a lot of people by surprise when they saw I had my own website, business card, and established process of doing things so that I stood out from the typical lazy high schooler. I've always been pretty creative and stuff like advertising, business, public relations and communication are some of my interests for a career after college. Now I just want to expand a little and see how successful I could be, but play by the rules if I do so. I'm not looking to make enough $ off of this to be able to be self-supportive..because I'm not, since I'm a dependent living at my parents' house. If I could turn over $5k after tax in a year I'd be more than happy, just because I accomplished everything on my own. If I can accomplish this at 19 years old I think it would greatly benefit me in the future form having the experience of owning/operation a business..cleaning cars is also somewhat of a hobby for me, I enjoy it..to add to my motives.

The ONLY thing I don't like is that I do not own a pickup truck, or small SUV that's appropriate for a mobile detailing vehicle, hauling stuff around in the Mustang isn't practical and if I were to get a hot water extractor, I may not be able to fit it in the car. But on the other hand, when customers see my car and if it's all clean and shiny, they're impressed and I get tips because of how organized I am

 

I might be moving to florida in fall for a year or so. I have a truck, lol. I'll work for $25 an hour.

 

zing.

 

Not one single 'yes'. Lol.

 

I thought about doing this awhile back. I have a truck, but would need it for other things, so I did not want to totally commit it to detailing. I was thinking of a small trailer with the tank, steam cleaner, generator and small air compressor. If you are able to do it at your residence, you could save alot on overhead. Theres alot of depending factors and different ways to "sell" your business. You just have to decide on what you want, versus what is practical, and decide from there.

Agreeing with what WNRacing said, regardless of if it's a "legit" business, a side thing or whatever, cover your ***. I would strongly suggest taking good, clear pics of every car you do. If you're detailing it, you are obviously going to see alot of the car. If you notice a few scratches on the rear quarterpanel, a scratch in a door glass, a moulding hanging off, a screwed up handle on a door panel, take a pic of it. It might sound like a waste of time, but just wait til the first time someone calls you back after picking their car up, blaming you for denting the front fender. Especially in todays world, you cant cover your *** enough.

I have detailed cars and airplanes for quite some time. If I can be of any help, lemme know.

 

I do this exact thing, Before I start I go over the car with the customer and show them problems that I won't be able to correct, and after I'm done I go over it with them again to show specific corrections made, I take a lot of before&after photos.

 

go legit.....

just because you have a business license does not mean you can't do work on the side(just like you do now). to truly support yourself you will need to grow, and that takes advertising. you will be working with people you don't know.

 

Gotta be careful man.

If yer detailing a $75,000 BMW for a lawyer who has a hot date that night... god forbid you trip over something and damage the car. He will **** you six ways from sunday in the courts and you will probably spend the next 15 years paying him money

If you dont go legit i would definatly keep it a small side thing for friends/family etc

never underesitmate the level of asshollery that even the nicest people can stoop down to if they see the potential for making a few bucks at your expence.