#05 - Monday Minute | How to Structure Your Car Dealership: LLC vs S-Corp vs Sole Proprietor
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Hey everyone and welcome to the Monday Minute from Podium, a quick reset to help you lead
better, think clearer, and build your dealership with attention.
But before we get started, remember to look at Sunday's newsletter, it kind of lines everything
up for us. The newsletter lays out the full steam theme, the wise behind it, and simple
exercise for you and your team to work through. The Monday Minute is the mindset, the newsletter
is the roadmap. All right, Jeff, what we got this week.
Okay, so we're going to talk about ownership structure. So like we've talked about for
the last few weeks, just really getting down to like the nuts and bolts of setting up your
dealership. So the majority of you have already done this, but if you have the ability or
if you haven't already get it set up, just don't run out and open the doors, right? You
don't need to worry about it. You just grab some LLC and you get going. What you want
to pay attention to is how you're going to structure your dealership that should match
both your goals, your risk tolerance, and where you want your business to go. So a sole proprietor
is super simple, super inexpensive. It's basically just pass through income, right? Whatever
your dealership gets hit with, you get hit with. You could set it up as a partnership,
whether you have partners or you have a spouse as a partner. You just want to lay out all
the expectations very clearly in a document. I think if you talk to anyone who's had an
actual partnership in their dealership, you have got to spell it all out. I just, I can't
even stress that enough. Who does what and who gets compensated for what? And it doesn't
have to say, don't they say the worst ship is a partnership? Yeah, it doesn't mean because
there's two of you that you both get the same compensation and you go, oh, I'll do a little,
he'll do a little. It doesn't work. Spell it out. And then obviously you have an LLC,
which is where many independent dealers land according to your state rules, things like that.
It offers some personal protection, flexibility. You can obviously still file as an S core or
C core, depending on how you want to do it. But that'll come down the road when you go to file
your taxes and things like that. So I'm filed as an LLC that, well, I'm incorporated as an LLC,
but I file as a S core or C core, depending on the business, but talk to your attorney,
call our buddy Steve over at Ignite Consulting, make sure you get it set up right. Yalu?
Yeah. Yeah. And so your action this week is first, get clear on your goals. Are you staying
small? Are you getting bigger? Are you going to scale to something crazy? And then second,
compare the risk and the taxes because C core is taxed different than an S core, but all these
things. So you want to make sure you're doing this right way. And like Jeff said a minute ago,
third, talk to a CPA and a business attorney. Don't make mistakes that you can't undo later on.
It isn't about choosing the best entity. It's about choosing the right one for you and how you
operate and you want to grow. So if you build a foundation correctly, everything else stands
together. So let's build this thing together, Jeff.
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