Forming an LLC & insurance question

[Plasmech]

First off, I hope it's OK that I post this in the commercial forum. I've been around for a while now, hope I've earned the right to post something in here. If not, I apologize.

I spoke to an insurance man today. I told him that I am working on trees 2-3 days a week, I'm entry-level, I don't mess with primaries, no bucket truck, no crane...just dope on a rope and a dope on the ground.

Now, before I get blasted for being a "weekend warrior"...two months ago I took a 10% pay cut AND an additional 20% cut when my work week was reduced to 4 days. This by chance happened just as I was getting serious about tree work, done a lot of reading, posted a ton of questions on this forum, was improperly called a troll, all that stuff. So please understand that I am not some Joe Blow with a 35 CC Craftsman chainsaw and a 25 year old extension ladder...

Disclaimer over...

The insurance man suggested that I form an LLC ($125.00 in the state of PA) and offered me $500,000 property and bodily injury for $1050. This doesn't seem bad at all.

My question is, does an LLC build an impenetrable wall between my "business" and my personal assets? Also, is $500,000 an adequate policy or is it a joke? Keep in mind, I'm not going to be taking down 6 foot diameter oak trees leaning over million dollar houses because I simply don't know how and wouldn't be able to to it with the minimal level of experience I have now.

Oh yea, he also said I could write off all the equipment I just bought and am still buying with the LLC. I assume this is true?

Thanks for any help pros!

-Mike

 

[TreeTopKid]

First off, I hope it's OK that I post this in the commercial forum. I've been around for a while now, hope I've earned the right to post something in here. If not, I apologize.

I spoke to an insurance man today. I told him that I am working on trees 2-3 days a week, I'm entry-level, I don't mess with primaries, no bucket truck, no crane...just dope on a rope and a dope on the ground.

Now, before I get blasted for being a "weekend warrior"...two months ago I took a 10% pay cut AND an additional 20% cut when my work week was reduced to 4 days. This by chance happened just as I was getting serious about tree work, done a lot of reading, posted a ton of questions on this forum, was improperly called a troll, all that stuff. So please understand that I am not some Joe Blow with a 35 CC Craftsman chainsaw and a 25 year old extension ladder...

Disclaimer over...

The insurance man suggested that I form an LLC ($125.00 in the state of PA) and offered me $500,000 property and bodily injury for $1050. This doesn't seem bad at all.

My question is, does an LLC build an impenetrable wall between my "business" and my personal assets? Also, is $500,000 an adequate policy or is it a joke? Keep in mind, I'm not going to be taking down 6 foot diameter oak trees leaning over million dollar houses because I simply don't know how and wouldn't be able to to it with the minimal level of experience I have now.

Oh yea, he also said I could write off all the equipment I just bought and am still buying with the LLC. I assume this is true?

Thanks for any help pros!

-Mike

Remember LLC assumes that their is more than one person in the corporation so if you were the sole proprietor they would have no other recourse than to pursue you for your personal assets; If your personal assets are the only assets of the LLC.

The Insurance seems cheap but make sure you have the minimum required insurance that is required by your state.

 

[Grace Tree]

I'm buying 1 mil per incident, 2 mil total for about $750 if I remember correctly.
Phil

 

[PA Plumber]

My question is, does an LLC build an impenetrable wall between my "business" and my personal assets?]

"Impenetrable" is a big word.

The business I work for is an LLC. As long as the line between personal and business is clear cut, there shouldn't be any problems.

Sometimes when filling out credit apps for suppliers, I have had to guarantee the company funds with a personal signature. I am guessing there is no line drawn between personal and business if the account would be in arrears.

As far as liability goes, I would think the LLC should be its own entity and you, a managing member/employee of that entity.

Another thing comes to mind regarding an LLC in the state of PA; Whether or not you get WC, is up to the insurance company. If you were incorporated, you would automatically be eligible for WC as an employee of the company.

 

[rngrchad]

I believe my friend who does contracting carries 130 per month insurance for his biz. I work for an LLC and was told that if anything happens the business owners personal assets outside of the company are still safe. Even if the business goes bankrupt?

 

[treeclimber101]

First off, I hope it's OK that I post this in the commercial forum. I've been around for a while now, hope I've earned the right to post something in here. If not, I apologize.

I spoke to an insurance man today. I told him that I am working on trees 2-3 days a week, I'm entry-level, I don't mess with primaries, no bucket truck, no crane...just dope on a rope and a dope on the ground.

Now, before I get blasted for being a "weekend warrior"...two months ago I took a 10% pay cut AND an additional 20% cut when my work week was reduced to 4 days. This by chance happened just as I was getting serious about tree work, done a lot of reading, posted a ton of questions on this forum, was improperly called a troll, all that stuff. So please understand that I am not some Joe Blow with a 35 CC Craftsman chainsaw and a 25 year old extension ladder...

Disclaimer over...

The insurance man suggested that I form an LLC ($125.00 in the state of PA) and offered me $500,000 property and bodily injury for $1050. This doesn't seem bad at all.

My question is, does an LLC build an impenetrable wall between my "business" and my personal assets? Also, is $500,000 an adequate policy or is it a joke? Keep in mind, I'm not going to be taking down 6 foot diameter oak trees leaning over million dollar houses because I simply don't know how and wouldn't be able to to it with the minimal level of experience I have now.

Oh yea, he also said I could write off all the equipment I just bought and am still buying with the LLC. I assume this is true?

Thanks for any help pros!

-Mike

noif you buy equipment through the business but need to cosign for it if that equipment hurts or kills someone they can go after the cosigner if the insurance can't pay what they want you need a million no joke

 

[TreeTopKid]

I believe my friend who does contracting carries 130 per month insurance for his biz. I work for an LLC and was told that if anything happens the business owners personal assets outside of the company are still safe. Even if the business goes bankrupt?

A sole proprietor CANNOT be an LLC. Plasmech was asking about himself.

 

[Garfield]

forming an LLC

I would recommend buying a book at nolo.com on forming an LLC. It has forms and all the info you need. In Missouri you can form an LLC with one member. It does provide asset protection.

 

[CentaurG2]

As any CEO of a large troubbled corporation will attest to, the line between business and personal responsibility is becoming increasingly blurry in the US. Don’t think for a moment that INC or LLC will shield your personal assets. Such designations will only give you the opportunity to argue the facts in front of a jury of your peers. A savvy lawyer will find ways to punch holes in your INC or LLC and say you are were operating as a sole proprietor. Make sure you follow the rules in your state. Always remember, if it looks like a duck and quacks like a duck than it is a duck in the minds of a jury. Consult with your lawyer and your accountant before making any business decisions. That’s why you pay them the big bucks.

 

[Dadatwins]

You need to talk to a lawyer about setting up the LLC and what the insurance requirements are in YOUR state. They are all different and the LLC rules are all diffrent in each state also. An accountant is the place to talk about what can be written off and when. As for liability, LLC can offer some protection and a lot more that sole prop but NOTHING is concrete wall. Also remember legal fees to fight something can outway any fines or penalties that may arise and hopefully will not. Insurance really is last resort, you need it but if you ever try to use it, they will probably drop you, and you can almost forget about trying to get it again. I applaud you for trying to go legit, but prepare yourself for LOTS of paperwork and some checks going out.

 

[teamtree]

As a former CPA I would avoid an LLC, especially a single member one in which you have ongoing operations.

LLC are great for real estate and non-operating entities.

You are awarded more benefits as an S-Corp....both tax and liability.

If your professional is suggesting an LLC because it is cheaper....you need to find a new lawyer and a good CPA.

As far as liability goes....if negligence creeps its ugly head into the picture then you are fair game....your only hope at that point will be bankruptcy to keep your house.

And for what it is worth...many times people come out of bankruptcy smelling like a rose.

If you want specifics on the LLC vs. S-Corp

you can cut your self-employment tax in half with an S-Corp.

Also for Workers Comp on yourself....you minimum salary under an llc is like 48,000. It is like 20,000 for a corporation

Do you have business property such as a storage building or lot? Set that property up in an llc and put your spouse as co-owner and pay rent to that llc.

 

[PA Plumber]

A sole proprietor CANNOT be an LLC. Plasmech was asking about himself.

The company I work for is a sole proprietor filed as an LLC, and has an "S" filing status.

 

[John Paul Sanborn]

As a former CPA I would avoid an LLC, especially a single member one in which you have ongoing operations.

What he said.

Though if you have limited income from the tree work, then the c corp can be a headache. You need to keep payroll and pay yourself ect...

I am an LLC because I mostly do sub work and the LLC with the tax number is one more point of distinction from being an employee.

I've been hit hard by the self employment tax the past few years though.

 

[Bushman_269]

A sole proprietor CANNOT be an LLC. Plasmech was asking about himself.

Don't claim to know Texas or Pennsylvania law but the is NOT true in New York.

 

[PA Plumber]

Don't claim to know Texas or Pennsylvania law but the is NOT true in New York.

Unless the laws have changed, it's not true in PA either.

 

[John Paul Sanborn]

I know a number of people who operate the LLC under a DBA name.

 

[TreeTopKid]

Don't claim to know Texas or Pennsylvania law but the is NOT true in New York.

You actually can here, but the fact is they will come after your ***t if you're a sole proprietor what other re-course do they have?