| Talk to people about starting a business and the first | | | | electrical work on burns to the ground. Nobody was |
| thing they will say is you should form an LLC or | | | | inside, but I am still going to get sued. It's okay though, |
| corporation to protect yourself. This may seem fairly | | | | because I am a corporation right? Well, yes and no. |
| straightforward, but is filing one of these entities really | | | | What is our problem here? The problem is we need to |
| enough? Not by a long shot. | | | | pay someone to defend us in the lawsuit. Furthermore, |
| Let's get something out of the way right up front. I am | | | | we are going to need to settle with the homeowner |
| not suggesting in any way that you should forgo | | | | since it is pretty obvious our negligence caused the fire. |
| creating a business entity to shield your personal | | | | These two facts raise one big issue. Where am I going |
| assets from the potential liabilities of the business. | | | | to get the money to deal with this? How am I going to |
| Forming a corporation or limited liability company is | | | | pay my attorney and the settlement? An attorney is |
| almost always a smart move. The question we are | | | | going to run tens of thousands of dollars and the |
| confronting in this article is whether creating those | | | | replacement of a new home is going to be far more! |
| entities is enough or should something more be done? | | | | The problem is I did not buy liability insurance. This is |
| Let's look at an example to flush out the problem. | | | | actually a common mistake. People are told over and |
| I am an electrician. I am tired of doing all the work and | | | | over that business entities will protect their personal |
| getting none of the profits. I decided to leave my job | | | | assets from seizure. This is true, but what about the |
| and start my own electrical business. I read that I | | | | business itself? A liability policy will pay attorney fees |
| should form a business to protect my assets and | | | | and the settlement money needed in the above |
| decide to go ahead and form an "S" corporation. Once | | | | example. Without a policy, my business is cooked and I |
| it is up and running, I decide I am protected and start | | | | am going to have to find a job again. |
| seeking out business. I soon have a lot of business and | | | | Forming an LLC or corporation is usually a very smart |
| have to rush to meet my deadlines. In one case, I | | | | move. Just make sure you don't rely on them entirely |
| make a mistake and a new home that I did the | | | | for your defense when things go bad. |