Recommendations- Liability Insurance?

[petersonra]

I never claimed nor implied absolute immunity. I was just saying what I have experienced personally. I will definitely admit I should have chosen my words more carefully.

This is what you wrote:

Well I know for a fact at least in the state of Wisconsin when you have a LLC you can't be sued personally.

If you "can't be sued personally" that implies complete immunity to liabilities of the LLC.

Incidentally, even if you eventually win, you can still be sued over the liabilities of your LLC. That is a primary reason to have liability insurance. The insurance company covers you legal expenses that way. otherwise the legal expenses could well force you into very bad situations.

 

[EATDIRT]

This is what you wrote:



If you "can't be sued personally" that implies complete immunity to liabilities of the LLC.

Incidentally, even if you eventually win, you can still be sued over the liabilities of your LLC. That is a primary reason to have liability insurance. The insurance company covers you legal expenses that way. otherwise the legal expenses could well force you into very bad situations.

Fair enough lesson learned.

 

[sw_ross]

State Farm - answers...

State Farm - answers...

Talked to my State Farm agent recently. I had asked her to compare $500,000 (minimum required by this state) to 1million of liability insurance.

$500,000 -> $594 annually (based on myself as the sole employee, increases w/ additional employees).

$1million -> $667 annually (ditto).

The policy additionally covers $5000 in personal property (tools stolen, etc).
For $75 I would probably prefer the larger policy, but I would wait until an attorney and/or accountant advises me on that choice.

 

[petersonra]

my umbrella policy takes my HO and car liability insurance policies from $250,000 to $1 million for around $100.

 

[Fulthrotl]

At this time I'm doing R&D related to converting my currently held Non-Contracting Master's license over to a Contracting Master's license. I'm in North Dakota. It's relatively easy, other than the forms, etc, hurdles with the state here.

We're required to have $500,000 worth of liability insurance here.
Generally, what do all of you get for liability insurance? What company do you use? How much can I expect to pay for this insurance? Is cost based on size of operations (#of employees, etc)?

Last year I talked to my State Farm agent that I have other insurance through and they were talking a price of around $650/year? (If I remember correctly!)

TIA for info related to this!

obviously, it varies from state to state.

i have $1m/$2M general liability here.

operating as a sole proprietorship, as i'm personally liable
for anything i do myself, and i'm a one man band, it wasn't
worth incorporating over.

and LLC's were not permitted for C-10's until recently here.

now.... with tax changes in the air, it might behoove me
to incorporate. if i do, i'll set up two corporations, one to do
the work, and one to hold assets, that will be rented back to
myself.

if federal income tax for corporations drops like they are
promising it will, it'd cut my taxes by about 60%.

 

[electrofelon]

I definite would talk to an accountant, and probably have them help me set up my book keeping!

I also would seek consultation regarding setting up the type of ownership.
I was assuming an accountant would be able to do that, but the lawyer route is probably good advice!

Thanks!

I think you will find that most accountants will tell you that they can do more for you as far as your tax liability if you are incorporated. Because of this, and the liability issues, you really shouldn't be operating as a sole proprietor.

 

[sw_ross]

LLC vs inc.?

LLC vs inc.?

I will plan on consulting with an attorney regarding this matter, but on the surface of it, if I look at my goals and objectives (just to be able to operate as a one man shop, maybe hiring help on an as-need basis) I have a hard time picturing major benefits by going the Inc route!?

 

[kwired]

kwired I totally agree with your last sentence though. But I personally would never go down that road.

You may not intentionally go down that road, but that don't mean someone that isn't happy for whatever reason won't make you defend yourself regardless.

The other end of this is vendors and taxes. If your corporation owes any of those some money, the corporation maybe is one more barrier before they come after you to try to collect, especially if you are a major shareholder, but that don't mean they can't ever get past that barrier.

 

[petersonra]

Most small business people who are incorporated in some way are going to file their taxes under subchapter (s) status. All that means is that the profits get passed thru the corporation to the individual taxpayer for income tax purposes.

This means you avoid the double taxation penalty all other corporate entities endure. The corporation pays tax on the profits it makes and then distributes what is left to its stockholders who then pay personal income tax on those proceeds, so the profits end up being taxed twice. With a subchapter (s) election, the corporation pays no income taxes since the profits go straight to the owner(s) just like they would if it were a sole proprietorship.

 

[electrofelon]

I have a hard time picturing major benefits by going the Inc route!?

There are. The country is very favorable to corporations, its just the way it is. One example of how a corporation can lower your tax liability: The IRS only wants to see about $5000 (IIRC, dont quote me on that) in "income" from a corporation to an individual. The rest can be "rent" or "reimbursement" and thus is not subject to the other half of the unemployment tax. As far as S-corp vs LLC, I think you will find the tax code to be vague enough that different accountants/attorneys prefer one over the other. My accountant/attorney (he is both) thinks he can do more with an LLC. Another accountant thinks the S-corp is better. He was telling me that the have friendly debates with each other about their respective positions.

Another benefit of an LLC is they are very flexible in allowing you to bring in people, say for just a job or two. This greatly simplifies bookeeping as they arent employees. Around here, many contractor crews are set up this way: the 8 guys are not employess, they are members.

 

[petersonra]

My accountant/attorney (he is both) thinks he can do more with an LLC. Another accountant thinks the S-corp is better.

An LLC can also be an "s-corp".

Subchapter (s) status is solely about income taxes. It has absolutely nothing to do with what type of corporation is used, and is not a type of corporation in itself.