Stump Grinding Business creation within a Tree Service

JJM IV

Member
I am exploring creating a stump grinding business that I can sub-contract stumps to. I am currently a LLC and wonder if there are significant tax and insurance benefits to having a stump grinding biz that is separate. That would save a lot of time on my tree crew and subsequently save on Workers Comp. I assume the money the sub-contract work could also reflect a cost to my tree biz. Any other potential benefits? Can I do this without breaking the law? Concerns?
 

Fivepoints

Active Member
As someone who owns two different LLC's, be ready for the bookkeeping headaches. Which business does this expense belong to. What's that account # again. If they are truly separate, you'll need another bank account and have to do another tax filing. Unless you have a dedicated employee for the stump grinding business, you'll have to make sure to keep up with who was working at which business, when. Just things to consider.
 

OasisTree

Active Member
Also, here in Missouri the work comp rate for stump grinding is the same as general tree work. I dont think it would be worth the headache of keeping it separate. You also would have to figure in more for CPA costs.
 

epete112

New Member
Some good advice here. You possibly could save on your Work Comp cost depending on what the rates are in your state for Tree Work versus Stump Grinding, however there would be duplicate costs for some of the General Liability coverages as well as the aforementioned accounting costs. Unless you are doing a lot of stump grinding for others, the potential savings may not outweigh the additional hassle it will take to separate them.
 

Tr33Climb3r

Well-Known Member
I would recommend keeping them separate. Now I am no accountant or lawyer. But keeping them separate allows you flexibility with what the future may bring. I may have the option to buy one in a year or two. I will be keeping it separate. Who knows maybe I will want to run it for a few years and offload it to a new buyer. Or maybe morph a few more services into it. Also for me it would be easier to keep clean books for tracking purposes.
 
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