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LLC/Personal Liabilty ?s

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  • LLC/Personal Liabilty ?s

    Ok. The company that I have been building a product for has asked me to come on board. Thy want to pay me per unit, on the books as an employeee of their corporation. I will build the units in my shop. What will I need to cover myself in the form of liability and such? Will be an employee of their corporation be enough to protect the roof over my head or should I be considering a full blown small business position? I do work on the side now and don't do more work than I legally need to claim at the end of the year. I want to continue to be legit with everything into the future and looking for some opinions. Always wanted to start my own business but a week economy has been putting me on hold for a while. All input is appreciated and I think this oppurtunity to do it on a partial basis working with one company as well as getting my own going could be great. Thanks. Dave PS- Am I too confusing now? LOL

  • #2
    are you reffering to regular insurance or legal stuff like product liability?

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    • #3
      As an employee of their company, working on their payroll and them taking the taxes out for you makes the results of anything you do for them their responsibility. Now if you were working as a subcontractor there could be liability on you. YOu do not need to get a LLC or any type of business license working under their payroll so don't even worry about that. The less like a seperate entity/business you apear to be the less you have to worry about.

      Just being an employee that works from home and buys his own tools is the best solution you could ask for. Even if you get hurt at home, if you're technically "on the clock" for them and working for something of theirs they even have to keep workmans comp on you

      Although they can weasel their way around that one saying that "you should have been on "company grounds" or something but as long as you keep your paycheck stubs if it were to ever come to that and fighting about who is responsible for your medial bill a judge would likely side with you..

      As for your home and tools, they (the employer) would not be responsible for them if there was a fire or anything resulting in the damage of said property adn tools(welder whatever) as a result of you working.

      I have owned my own home painting business for a tad over 5 years and i've learned a lot about what can be put on me so i am extra carefull. I also run my welding business underneath the home painting business' ID and insurance (this is legit) this allows the insurance on my company to cover anythign that may happen while i'm welding for some one. I don't have anything to cover the medical i rack up being self employed as i pay no workmans comp. Also, don't sub work from them if you can be an employee, it may sound better but you get screwed royally on taxes as a sub (been there, done that)

      Good luck
      Last edited by turboglenn; 11-14-2008, 04:09 PM.

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      • #4
        I don't understand how adding you as employee makes sense for them-as Turbo pointed out they will have to cover Payroll Taxes & WC

        I would look into how they are actually going to pay you as it doesn't add up to pay you by the Piece- I doubt it is legal- don't know for sure.

        To figger out the Taxes they owe on you, based on the amount they pay you per piece- which is sort of a Salary- would be a PIA for accounting.

        .... and if they don't take money from the amount per piece then they are doubling their cost for the Product-which certainly does not make sense.
        Last edited by Broccoli1; 11-14-2008, 09:19 PM.

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        • #5
          I'll have to ask them some more questions. It is a corporation they started. They want me on the books and all. Per diem pay. Dave
          Originally posted by Broccoli1 View Post
          I don't understand how adding you as employee makes sense for them-as Turbo pointed out they will have to cover Payroll Taxes & WC

          I would look into how they are actually going to pay you as it doesn't add up to pay you buy the Piece- I doubt it is legal- don't know for sure.

          To figger out the Taxes they owe on you, based on the amount they pay you per piece- which is sort of a Salary- would be a PIA for accounting.

          .... and if they don't take money from the amount per piece then they are doubling their cost for the Product-which certainly does not make sense.

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          • #6
            hope it all works out, a little extra $$ is always nice. hope you find a CYA situation so you can keep the opportunity.
            good luck.

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            • #7
              I think it will come together. The guys are gnuine law enforcement officers with more than 25 years between them. They put their savings and hearts into their products. Great people to work with so I think it should work out. Dave
              Originally posted by fun4now View Post
              hope it all works out, a little extra $$ is always nice. hope you find a CYA situation so you can keep the opportunity.
              good luck.

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              • #8
                Your description of the employment situation sounds unclear and that can be risky. One simple way to clarify this is ask the company you are working for whether they will send you a W-2 statement at the end of the year (as an employee) or a 1099 statement (as a subcontractor) for payment of the work you do. Depending on the state you live in, the rules for subcontracting can be tricky and complicated. BUT, it often hinges on whether you are required to pay Workers Compensation insurance. Often, as an owner of a company you can claim an exemption for WC insurance. If you are an employee of company they will be required to cover you for WC insurance. Also, the IRS has something to say about your employment status. If you work full time for only one company as a subcontractor - even if you have a subcontract - the IRS can declare that you are an employee (this can happen when you work for one single company for more than a year or two). The reason: they get more tax revenue if you are an employee. The easy way to find out more about this is call the Secretary of State in your location. One thought about personal liability. If you are worried at all about lawsuits filed against you for the work you do, consider moving all your assets to your wife's name, that's what doctors and attorney's do (of course that raises other issues that can keep you up at night).

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                • #9
                  Theyare the ones that asked me to do more work. They said they would pay me as an employee of the company and that I should talk to some people about liability and what not because I will be doing the work from my house. I will ask about the w2/1099 designation. They seem to want things to work out and want me to run their shop fulltime if it gets to that point. Dave
                  Originally posted by MTBob View Post
                  Your description of the employment situation sounds unclear and that can be risky. One simple way to clarify this is ask the company you are working for whether they will send you a W-2 statement at the end of the year (as an employee) or a 1099 statement (as a subcontractor) for payment of the work you do. Depending on the state you live in, the rules for subcontracting can be tricky and complicated. BUT, it often hinges on whether you are required to pay Workers Compensation insurance. Often, as an owner of a company you can claim an exemption for WC insurance. If you are an employee of company they will be required to cover you for WC insurance. Also, the IRS has something to say about your employment status. If you work full time for only one company as a subcontractor - even if you have a subcontract - the IRS can declare that you are an employee (this can happen when you work for one single company for more than a year or two). The reason: they get more tax revenue if you are an employee. The easy way to find out more about this is call the Secretary of State in your location. One thought about personal liability. If you are worried at all about lawsuits filed against you for the work you do, consider moving all your assets to your wife's name, that's what doctors and attorney's do (of course that raises other issues that can keep you up at night).

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                  • #10
                    The people you should be talking to about insurance are Insurance folks

                    It certainly is an interesting scenario.

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                    • #11
                      Additionally a lawyer may prove useful.

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                      • #12
                        The way you start out (pay by the piece, your own shop) sounds like contractor/1099 stuff to me. They arent supplying any tools, electricity, consumables, etc. Who is going to buy the material? Are you going to do work for other customers at the same time/location?

                        I agree that a consultation with your insurance company and lawyer are in order. You DONT want to find out youre an employee after a couple of years of thinking youre a contractor. IRS types a good at twisting things to get YOU in trouble. Thats their job after all.

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                        • #13
                          Just to clarify that last post.

                          For several years I thought I was "leased" to a trucking company. For some reason some expenses came into question and I contacted my lawyer and he said "you cant do that". Now this is what had been going on for years. Why does it suddenly change when Im doing the same thing he(my "employer") had been doing. Now I find out that this is a broker agreement and Im not leased/insured/represented by that company at all. The result was that my house has a $15,000 tax lien and the IRS is confiscating 100% of my income from some other brokers. As you know you cant make a living if you spend $500 on fuel to transport a product then lose the entire amount of compensation you buy that fuel with.

                          Check ALL your avenues with this.

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                          • #14
                            As much as I detest lawyers, this is one time I would be consulting with one.

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                            • #15
                              Thanks all. I am going to contact a lawyer. It's gonna be a chunk of change but I want to know in the future. Also, if it is a subcontractor position I want to learn about setting my business up for future work as well. I guess I have some decision making to do. Dave
                              Originally posted by mikeswelding View Post
                              As much as I detest lawyers, this is one time I would be consulting with one.

                              Comment

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