LLC and you may still be liable?

[indy2tall]

I have been looking into becoming an LLC and my accountant says it helps but be sure that your business can function 100% as a separate entity. She said this is crucial since the liability protection can be cast aside if any co-mingling of funds occurs. For instance say it is a tight month and no money to spare in the business account but your Z breaks and you spend money out of your own pocket to fix it. She says a good attorney will lay the wood to you in a lawsuit if you have mixed funds. Has anyone else been told this?

[nobagger]

We are looking to do the same thing this year. But my guy didnt say anything about using personal funds, just mentioned the liability part. Why would the IRS or Attorney care how you spent your money as long as you claimed it all?

[rodfather]

I'm in a LLC and have never of this

[John Gamba]

Why would the IRS or Attorney care how you spent your money as long as you claimed it all?




Lets say you get sued and theres 1,000 in your buisness account, now they see that you payed a bill with your own money and you have 500,0000 in your personal account, they are going to say that your all one and get the 500,0000 in your back account.

Lawyers only care about the big money and will get it if you are careless.

[teeca]

being a LLC or even INC, you are still open for a law suit. if you own the company, you CAN and WILL be held personaly responsable for what ever happins. the LLC helps you on paying taxes, vs being INC. just have good insurance (liability), that will help absorb any law suit. also if you have family (kids, etc) that may take over, you should look into a LLF, that can save you BIG money in the tranfer of ownership down the road. but in any case, you should consult an attorny and have him/her go thru ALL the business entities, and help figure out what the best route is.

[John Gamba]

you should consult an attorny and have him/her go thru ALL the business entities, and help figure out what the best route is.


This is very true. Also get second opinions on any legal stuff. Show me a smart attorney and i'll show you two dumb ones.

[indy2tall]

being a LLC or even INC, you are still open for a law suit. if you own the company, you CAN and WILL be held personaly responsable for what ever happins.

This is news to me. I have always thought one of the main reasons for an LLC or INC, after how taxes are handled, was to protect personal assets. Teeca do you have personal experience in this? Did your attorney tell you this?

[Tim Wright]

It really does not matter what type of entity you run. If a lawyer has brought a case against you, he is going to find every dime to your name, whether directly indirectly, hidden, proxy, or whatever. He will then pursue each and every dime until you die a bloody, slow death to the lazy moron who wants all of your money.

The key, hire a better lawyer than the lazy moron that is sueing you.

How do I know this. Because in my video production company, I do video depoistions for lawyers from Baltimore, to Northern Virginia to Cumberland Maryland to Winchester VA and the Panhandle of WV, as well as other lawyers throughout the country.

I see it every week.

Tim

[indy2tall]

It really does not matter what type of entity you run. If a lawyer has brought a case against you, he is going to find every dime to your name, whether directly indirectly, hidden, proxy, or whatever. He will then pursue each and every dime until you die a bloody, slow death to the lazy moron who wants all of your money.

The key, hire a better lawyer than the lazy moron that is sueing you.

How do I know this. Because in my video production company, I do video depoistions for lawyers from Baltimore, to Northern Virginia to Cumberland Maryland to Winchester VA and the Panhandle of WV, as well as other lawyers throughout the country.

I see it every week.

Tim

LOL, you go broke both ways either from awarded damages or from attorney fees. It sounds like the key is just to not get sued!

[teeca]

i used to mow on the side as extra income, did it as a sole propri'ship, easy on taxes. just held good insurance (thank god never needed it). if you are INC, you need to have an accountant, an attorny, a break down of the officers, anual meetings, and the amount of stock that each officer holds in the corperation just to start. also, say sombody sticks you for a outstanding debt (they won't pay), you personaly can not sue them, the company needs to, and that means you need to have an attorny take them to court on your behalf. trty this link http://www.in.gov/sic/owners/index.html . one thing that being INC or LLC can give you is the ability to get goverment loans such as the SBA. and it can help you get other type of loans for equipment, etc. i am starting this comming spring doing lawn apps and light landscaping, i will most likly start as a sole propri'ship since i own all the equipment i need (but i will trade mark and register my name), and then if it takes off, i'll do the LLC, it is one of the simplest forms of corporation. try the link i gave and it will take you to all the form you need. the cost of LLC and trademark is $90

[teeca]

also try this link http://www.in.gov/sos/business/corps/guide.html simplfide version

[Tim Wright]

LOL, you go broke both ways either from awarded damages or from attorney fees. It sounds like the key is just to not get sued!

This is exactly right. I have talked to suing people on both sides of cases, and after about 6 months to a year of litigation, they are sorry they even started the whole mess and wish they had cut their losses.

On the other hand, when the awards are so huge that there actually is money left over after both sides attorneys get their every penny, then the sueing side is happy they have cash.

I cannot imagine many cases involving mowing being worth that much money unless someone was seriously hurt or killed, where any type of sueing action would be worth the effort and cost.

Tim

[Fantasy Lawns]

Good little thread with a bunch of info back n forth ... I'm a S-corp so I can only comment from that stand point

Co-mingle of personal funds with in the business is a Strick NO_NO ... it'll allow the corporate shield to be pierced .... easy to get around ..... you just make a business loan to the corp .... be sure to charge a reasonable rate of interest


The main advantage an Inc has compared to the LLC is when I sell my business .... it's a straight stock exchange ....while the LLC can't not be exchange unless it's with the members of the LLC ... what is called a corporate officer in the Inc side of life

As far as being Sued .... that's in the liability insurance ..... me caring a $1M policy gives 1 million reasons to sue .... could be a painful as kicking a rock in someones face .... a trailer un hooking or piece of equipment falling off n running into someone or something

[John Gamba]

Good little thread with a bunch of info back n forth ... I'm a S-corp so I can only comment from that stand point

Co-mingle of personal funds with in the business is a Strick NO_NO ... it'll allow the corporate shield to be pierced .... easy to get around ..... you just make a business loan to the corp .... be sure to charge a reasonable rate of interest




When i did the loan thing,i got whacked on personal tax. that sucked

[Fantasy Lawns]

That's a very good point John ;-)

[Tim Wright]

I have 1 mil in liability also. But should an issue arise, just try to have the insurance co step up to the plate.

They like to hold out for years. The interest that they make on the stock market more than pay for the lawyers and payouts when its all done.

Sad but that is info from many depositions against insurance companies who do not honor their policies.

Its all a big game, and as far as I am concerned a monopoly of the system.

Tim

[teeca]

a milloin sounds like alot, but i used to cut for a large grocery store change, and i had to hold $5 million liability. and i went to put a bid on a hospital, and they requird $20 million liability and also need a rider of the same amount for each pice of equipment (the insurance policy need each peice of equipment listed used and letter from the insurance co. stating that the liability was extended to the equipment) including the trailer! what a PITA!

[Tim Wright]

a milloin sounds like alot, but i used to cut for a large grocery store change, and i had to hold $5 million liability. and i went to put a bid on a hospital, and they requird $20 million liability and also need a rider of the same amount for each pice of equipment (the insurance policy need each peice of equipment listed used and letter from the insurance co. stating that the liability was extended to the equipment) including the trailer! what a PITA!

This is exactly how my 1mil policy is written.

Tim

[Mow Right]

also try this link http://www.in.gov/sos/business/corps/guide.html simplfide version

Where is a website like that for Ohio?

[FATWEASEL]

Like teeca said, a million $$ sounds like a lot but many people would be surprised how quickly that can be eaten up.

Case in point...

My 06 Dodge Ram was one of about 300 vehicles affected by the carelessness of a contracted painter, spray painting material silos on a windy day. I just settled today (3.5 months later) for a little over $3100. Most claims ranged from $2000 to $7000. You do the math. This was NOT the owners doings but his employees. There was also over $100,000 in claims from the company he was contracted to work for.

His insurer paid in full all the vehicle owers that didn't file through their own insurance and the contracting company. What's left will be subrogated through all the other insurance companies. If the contractors insurance is insufficient, he will probably be facing multiple lawsuits and his company will be blasted into non-existence. The owner of the painting company has been in business for decades and is probably old enough to retire and this is what he's now facing.

I'm not taking up for him. You've got to stay on top of your employees if you have them and also remind yourself to be careful around the public and their property.

[John Gamba]

That's a very good point John ;-)


Things you learn in a hot tub. your more then welcome to jump in steve

[teeca]

Where is a website like that for Ohio?
heres the link i think you want http://www.odod.state.oh.us/onestop/ just follow the steps.

[Mow Right]

heres the link i think you want http://www.odod.state.oh.us/onestop/ just follow the steps.

Thanks alot.. I am undecided to get an LLC now, and then just hire a accountant later at the end of next summer when I have more money.... or just f*** it and not do anything till mid next summer....

[Tim Wright]

We have discussed the 3 main types or formats of a business entity in light of liabilities.

However, there are other considerations in making the decision.

I went with the LLC for the lawn care and landscaping business, to open the door for easier growth, tax "loopholes or working the system easier, adding employees and benefits for them without having the state corporate doing business tax.

As for my video production company, I have inc'ed it for the same reasons, but a different format because the clientele are different and the liabilities come in different forms. I market to larger corporations and work with them on their products and services, and not their lawn and exterior physical image.

I will probably sell out the video production company and that would most likely be to someone that wants another inc'ed division in their already established company.

The selling of my landscaping company will probabaly not be to a larger company but a more local company if at all.

What I did was talk to my accountant on the following issues: Taxes and growth, employees and growth, personal taxes, liabilities, hmmm and what else, before I made my decisions.

Those are the things that I would consider and not the liability alone.

And, I would get moving on it and make a decision in the first quarter of the next year, near the beginning of it, to keep the calender smooth. Not a big deal though.

Tim

[VBsnow]

Guys, LLC's were intended for joint ventures. When 2 companies go into business for a joint venture. This is why you need 2 people to be an LLC. Ask your lawyer about the difference between members and managers. An LLC is alot different than others corp types. It changes your legal and insurance standing.

What caught my attention were the comments about having a better lawyer. In the end, if you have insurance, you cannot pick your lawyer. You want it to pay for the lawyer and any losses. What you need to concentrate on is keeping them out of YOUR personal pocket. Usually an accountant will direct you to the best TAX strategy, not the best LEGAL strategy. This is why I do not have brick masons roof my house.

[Tim Wright]

Guys, LLC's were intended for joint ventures. When 2 companies go into business for a joint venture. This is why you need 2 people to be an LLC. Ask your lawyer about the difference between members and managers. An LLC is alot different than others corp types. It changes your legal and insurance standing.

What caught my attention were the comments about having a better lawyer. In the end, if you have insurance, you cannot pick your lawyer. You want it to pay for the lawyer and any losses. What you need to concentrate on is keeping them out of YOUR personal pocket. Usually an accountant will direct you to the best TAX strategy, not the best LEGAL strategy. This is why I do not have brick masons roof my house.


1. Actually you CAN pick YOUR OWN Lawyer, BUT you CANNOT pick your insurance companies lawyer, which is two distinct different issues even when involved in the same case. Usually the other side sueing you is going at this point go after you and your insurance company, so what you have is different party litigation. Also, at this point it is not uncommon for the two to either compare notes and help each other or go into a co-counsel situation. And, if you are in a several state region such as I, and a primary attorney is from out of state, they have to bring in a lawyer licensed in the state to which they are coming into to do the sueing. In this case then the local attorney is a figure piece and is there only so that the out of state attorney can get things done.

2. True your accountant gives tax advise, usually different than general legal advise.

Tim

[topsites]

Well, yes...

Incorporating is done as a means to scare away the lawsuit fortune hunters.

It is not meant as a way to get out of all responsibility.

As for money, you should never have obscene amounts in your working accounts (such as the main business OR personal checking).
I'm sorry, don't know what to tell you if you do, but it's not a good idea.
You're better off putting that money in some kind of retirement fund, or do something with it LOL.
As for working accounts, keep as little in there as you absolutely need.

Because they are right, anyone knows you got it, sooner or later someone WILL go after it.

[VBsnow]

Those out there who are reading this may want to check your "duties" in the event of a claim on the GL policy. You can hire an attorney but the company comes first. By being the 1st named insured, all liability is transfered to the ins co for covered losses. So is the ability to settle and pay within liability limits. To clarify this question by state, you may want to read what you actually can do. Why would you pay for a lawyer when it's free? Dunno. Maybe WV is different than VA. Our virgins are much slower. :dancing: Just kidding, I have aplace in Pocahontas.

[Tim Wright]

Those out there who are reading this may want to check your "duties" in the event of a claim on the GL policy. You can hire an attorney but the company comes first. By being the 1st named insured, all liability is transfered to the ins co for covered losses. So is the ability to settle and pay within liability limits. To clarify this question by state, you may want to read what you actually can do. Why would you pay for a lawyer when it's free? Dunno. Maybe WV is different than VA. Our virgins are much slower. :dancing: Just kidding, I have aplace in Pocahontas.

You are absolutely right, and I think that things work very similarly in both VA and WV.

I am just saying that as being told from lawyers, when they sue someone, they will go after the company, then when transferred to the insurance-them, and also the main owner of the company.

The Case stylus would look like this.

Joe Plow - Plantiff

vs.

My Company, LLC,
and
Insurance Compnay X
and
My Name, et, al, - Defendants.

Then the Case Number.

Simply put, this means anyone that they can attach to the lawsuit, they will.

Tim

[VBsnow]

The reason I mentioned the difference is the notable workers comp climate in WV. It was monopolistic although I hear it is changing or just has changed.

Your right, the owner would be sued. The rule of thumb is to have enough insurance to satisfy the lawyer. They don't like to go to court or go through collections. In fact, they prefer to do nothing but settle. If you can keep them happy, it will not be an issue. They would much rather take your insurance than your house.

As for the original thread, you should talk to a lwyer to seperate your level of liability form yourself personally.

Good talk.

[Tim Wright]

Very sound advise.

Tim

[mmacsek]

I know this was stated on this thread and previous threads , Hire an attorney and follow his advice. Do a little research and don't just pick a name out of the phone book. The attorney I used was recommened by other attorneys as the best business lawyer. I thought an LLC was the way to go be he advised differently. He recommened Inc. subchapter S. The tax liability is no different than a LLC or sole prop. Everything passes through to me. This is not my knowledge but our CPA. As far as mixing personal with business our attorney advised on keeping personal assests in my wife and my name and business in my name only. My wife doesn't sign business checks because that could make her an officer and possibly open up our personal assests. The main reason to Inc. or LLC is to protect personal assests. Have a great day! Matt

[YardPro]

LOL, you go broke both ways either from awarded damages or from attorney fees. It sounds like the key is just to not get sued!


one word....INSURANCE......

a good insurance policy will prevent this.
they will cover legal fees, etc. all you pay is your deductable.
any business should have at least a $1M. policy...

[VBsnow]

This is probably one of the most informative threads that Lawnsites users can read. With that out of the way, check this out:

Here in VA you charge the officers of the LLC differently than other types of corporations. Since you have members and managers instead of officers the INS CO's charge differently. The members are charged a payroll basis of a sole prop @ $15,600 and the managers are charged like officers @ $26,000

What does this mean? Work comp is based on a per 100 basis. So the figure for members would be 156 and 260 for managers. We then multiply by the rate of $3(made up for simplicity). The member would pay $468 to be included for coverage and the manager would pay $780. The member would save $312 for the same coverage.

Use the info how you like. Just a little FYI on an oft overlooked fact.

[Team-Green L&L]

This is a true statement. It very seldom comes up in court, but if a plaitiff can prove you co-mingle (embezzle) funds from your accounts, your LLC may not protect you. It is also imparative that you sign everything as a "manager" or "owner" etc. If you are using your signature alone, without identifying your actions as a company, you are personally liable. My buddy lost his garage door company for that reason.

[Mow Right]

This is a true statement. It very seldom comes up in court, but if a plaitiff can prove you co-mingle (embezzle) funds from your accounts, your LLC may not protect you. It is also imparative that you sign everything as a "manager" or "owner" etc. If you are using your signature alone, without identifying your actions as a company, you are personally liable. My buddy lost his garage door company for that reason.

So to sign a check you need to write,

John Doe - Owner

or

John Doe - Doe's Lawn Service, Owner

?

EDIT: Sorry for a stupid question.. haha...

[Team-Green L&L]

So to sign a check you need to write,

John Doe - Owner

or

John Doe - Doe's Lawn Service, Owner

?

No, when signing a contract or "legal" document, the other party MUST be aware that they are signed a binding agreement with an LLC. To do this, it is advisable to add "owner" etc. under your signature area. "Authorized representative" is appropriate also.

[ALarsh]

Great advice and good read! Thanks

[John Gamba]

So to sign a check you need to write,

John Doe - Owner

or

John Doe - Doe's Lawn Service, Owner

?

EDIT: Sorry for a stupid question.. haha...



I had a stamp made up. it was easier to do.

[VBsnow]

Yardpro,

Where are you in coastal NC? I am on KI.

Anyhow, I'm on the way to Snowshoe for the weekend. Think snow!

[Duekster]

LLC - Limited Liability

NLC - No liability is not a business class.

[puppypaws]

It really does not matter what type of entity you run. If a lawyer has brought a case against you, he is going to find every dime to your name, whether directly indirectly, hidden, proxy, or whatever. He will then pursue each and every dime until you die a bloody, slow death to the lazy moron who wants all of your money.

The key, hire a better lawyer than the lazy moron that is sueing you.

How do I know this. Because in my video production company, I do video depoistions for lawyers from Baltimore, to Northern Virginia to Cumberland Maryland to Winchester VA and the Panhandle of WV, as well as other lawyers throughout the country.

I see it every week.

TimI have been in a few depositions myself and if your job is to video them you have taken pictures of the largest vultures known to man sitting in chairs at a table. If a lawyer dies and goes to hell he will probably have his own private office.

[Mow Right]

LLC - Limited Liability

NLC - No liability is not a business class.

To bad its not, or that is what I would be.

[Tim Wright]

I have been in a few depositions myself and if your job is to video them you have taken pictures of the largest vultures known to man sitting in chairs at a table. If a lawyer dies and goes to hell he will probably have his own private office.

Yup, It is one of the few industies that you get paid for your time whether you win or lose. Depending on how the lawyer operates the business. Most get paid win or lose.

Tim

[puppypaws]

Yup, It is one of the few industies that you get paid for your time whether you win or lose. Depending on how the lawyer operates the business. Most get paid win or lose.

TimThey get paid win or lose, if they show up or don't show up, if they are on the phone or just thinking about you case and that could be in the shower. I could stop a lot of the crap that goes on everyday with lawsuits, just require the losing attorneys firm to pay the fees of the winning firm. This would keep them from chasing ambulances and jumping on every lawsuit available by making them understand there is a good chance their firm can win because of the evidence. Can you imagine how many frivolous lawsuits this would keep out of our courts, they would have to look very hard before jumping on every case. The attorneys would say to themselves, I had better leave that one alone because it is not cut and dried, I could possibly lose and have to pay attorney fees out of my pocket. It is a whole different game then.

[teeca]

sounds good, but that would force them to lie more then they already do!

[VBsnow]

Does anyone remember how much cheaper health insurance was before lawyers advertised? You guys should check out protectpatientsnow.org

Digest this: I sell insurance and the cost makes me ill. People who do all the right things and can't send their kids to the doctor. All the while I watch the Ghetto Gyno across the way taking medicaid patients while they throw trash in my parking lot. :usflag:

[John Gamba]

Does anyone remember how much cheaper health insurance was before lawyers advertised? You guys should check out protectpatientsnow.org

Digest this: I sell insurance and the cost makes me ill. People who do all the right things and can't send their kids to the doctor. All the while I watch the Ghetto Gyno across the way taking medicaid patients while they throw trash in my parking lot. :usflag:


Got to get rid of liberal

[lawnpro724]

Perhaps you should all take a look at the key first word in LLC...... LIMITED. Its Limited liability Corp for a reason.

[Team-Green L&L]

Lawyers were invented to lie for those who aren't good at it. Be thankful that there is someone out there to take those burdens from you. For me, that is a valuable commodity. I never think to myself, "I should call a lawyer"...I just do.

[John Gamba]

Lawyers were invented to lie for those who aren't good at it. Be thankful that there is someone out there to take those burdens from you. For me, that is a valuable commodity. I never think to myself, "I should call a lawyer"...I just do.


Lawyers dont lie. In there arena itswho can PROVE the truth or what appearers to be the truth.

[Team-Green L&L]

Lawyers dont lie. In there arena itswho can PROVE the truth or what appearers to be the truth.

God point, but "the truth is in the eye of the beholder" and that's the game. I guess manipulation is a much better word.

[John Gamba]

God point, but "the truth is in the eye of the beholder" and that's the game. I guess manipulation is a much better word.


Good way of putting it. Aether way, Layers still suck:(

[puppypaws]

Lawyers were invented to lie for those who aren't good at it. Be thankful that there is someone out there to take those burdens from you. For me, that is a valuable commodity. I never think to myself, "I should call a lawyer"...I just do.Are you calling yourself a compulsive liar but you think you are not very good at it so you need to hire a professional. Lawyers are point blank liars but in law school they brain wash them into thinking no matter what they say it is for the protection of their client, you still have to call a spade "a spade" even when a lawyer says it is just a card.

[Team-Green L&L]

Are you calling yourself a compulsive liar but you think you are not very good at it so you need to hire a professional. Lawyers are point blank liars but in law school they brain wash them into thinking no matter what they say it is for the protection of their client, you still have to call a spade "a spade" even when a lawyer says it is just a card.

I never said I was a liar, but I WILL protect the interests of my company by ALL means necessary! I have not had the need to lie or manipulate, but if it came down to the truth and my company...so be it! My job is to keep my company and myself out of that position. Everything you said is correct about attorneys and that's why I love mine. I AM the client he's protecting.

[mmacsek]

Call them what you want but Danny DeVito summed it up in the movie Other Peoples Money. Lawyers are like nuclear weapons, The enemy has theirs, I have mine. Love them or hate them it is necessary and not going to change. Matt

[John Gamba]

Call them what you want but Danny DeVito summed it up in the movie Other Peoples Money. Lawyers are like nuclear weapons, The enemy has theirs, I have mine. Love them or hate them it is necessary and not going to change. Matt


I watch that movie four times a year:) great stuff:)