LLC and you may still be liable?

Discussion in 'Business Operations' started by indy2tall, Dec 2, 2006.

  1. indy2tall

    indy2tall LawnSite Senior Member
    Posts: 417

    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?
     
  2. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    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?
     
  3. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I'm in a LLC and have never of this
     
  4. John Gamba

    John Gamba LawnSite Fanatic
    from ct
    Posts: 10,812




    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.
     
  5. teeca

    teeca LawnSite Bronze Member
    Posts: 1,202

    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.
     
  6. John Gamba

    John Gamba LawnSite Fanatic
    from ct
    Posts: 10,812


    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.
     
  7. indy2tall

    indy2tall LawnSite Senior Member
    Posts: 417

    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?
     
  8. Tim Wright

    Tim Wright LawnSite Bronze Member
    Posts: 1,034

    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
     
  9. indy2tall

    indy2tall LawnSite Senior Member
    Posts: 417

    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!
     
  10. teeca

    teeca LawnSite Bronze Member
    Posts: 1,202

    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
     

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