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  • started a topic LLC/Personal Liabilty ?s

    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

  • acx780
    replied
    There are so many ins and outs. You need to let a pro go over this. I know that part of the test of being a sub is wether you do work for others and it sounds like you want to have that option. You might not be able to do that if you are an employee. Insurance will try everything they can not to pay a claim so you need to be sure they understand what they are insuring. Sometimes deals like this are great and sometimes they can be a disaster. Hope this one ends up great and a good way to give it a reasonable shot is to talk to the people who get paid to have the answers.

    Leave a comment:


  • MTBob
    replied
    I just happened to see the following news article in the local "fish wrap", and thought of this thread. This is an example of how screwed up things can get if not done right.

    A federal jury has convicted a 59-year-old Livingston man for failure to pay more than $500,000 in federal taxes on the wages of nurses in his employ, according to the U.S. District Attorney for the District of Minnesota.

    Francis Leroy McLain, owner of a nursing professionals company, was found guilty on nine counts of failure to account for and pay employment taxes.

    McLain was indicted on Jan. 8. His trial this month in St. Paul, Minn., lasted nine days and the jury deliberated for three hours before issuing its verdict on Nov. 17, according to a release from the U.S. attorney’s office.

    McLain will be sentenced at a future date.

    According to the indictment, McLain failed to pay the Internal Revenue Service federal income taxes on wages earned by employees of Kirpal Nurses, which did business as Kind Hearts, based in Minneapolis, Minn. He also failed to pay the employees’ share of Federal insurance Contribution Act taxes

    “The criminal conduct spanned nine calendar quarters,” or just over two years, according to the release.

    Kind Hearts supplied nurses and other nursing professionals to various health-care facilities on a temporary basis, according to the release.

    Prior to starting Kirpal Nurses, McLain owned and operated several other temporary nursing services, including Lifelines Care, In., Lifelines Cooperative Care, Inc. and Cooperative Nurses, Inc.

    In 1995, McLain sued the United States in civil court, claiming that the nursing professionals who worked for him were independent contractors rather than employees and, therefore, he was not required to pay employment taxes, according to the release.

    The federal government disagreed and countersued.

    Those suits were settled in 1998. As part of that settlement, McLain agreed to withhold and pay employment taxes for nursing professionals who worked for any of his businesses.

    “McLain took steps to hide his ownership and involvement in Kirpal Nurses by using others as the owners and operators, including his daughter,” according to the U.S. attorney’s release. “From June 1999 through December 2001, McLain arranged to pay the IRS some, but not all of the employment taxes.”

    In May 2002, the Minnesota Department of Health advised Kirpal Nurses of a change in state law requiring all nursing professionals to be treated as employees and not as independent contractors. Seven months later, in December 2002, McLain provided the department with paperwork and “asserted that employment taxes were being withheld for all Kirpal employees, including nursing professionals.

    However, that same month, Kirpal Nurses paid the IRS $4,200 in employment taxes for the entire calendar year. “Kirpal failed to make any employment tax payments to the IRS after that.”

    The case was investigated by the IRS-Criminal Investigation Division, and was prosecuted by Assistant U.S. Attorneys David M. Genrich and Michael L. Cheever.

    Leave a comment:


  • jonnymag
    replied
    A. You can do piece work and still be considered an employee. It's very common in certain industries. So, for now, it's better for you that they want to treat you as an employee. Saves you all the payroll, social sec, etc. hassles.

    B. Since they want you to work at home using your own tools, better make sure that your homeowners, liability and fire insurance covers work-related activities in your home. You might want to factor that cost in when you figure out how much they're actually paying you.

    C. Despite what people tell you, you are always liable for your own negligence -- even when you work for somebody else. As a matter of course, they'll sue both the company and you in a law suit. So make sure that you're covered by the company's E&O insurance.

    D. Good CPAs aren't any cheaper than good attorneys. You might as well check with both. Better to be safe than sorry. An employment attorney to review your employment arrangement to make sure that you are an employee and that your butt is securely covered. And a CPA to advise you about how to make sure you act like an employee and not an independent contractor, and how to take full advantage of those "home office" tax deductions.

    E. If you decide later that you want to set up your own company, make sure you talk to a CPA and business attorney about which form of business entity would work best for your situation. Make sure you follow what they tell you. Nothing more wasteful than shelling out a lot of money to experts and not following their advice.

    Leave a comment:


  • Broccoli1
    replied
    Contact a CPA that is familiar with Small Business- cheaper than a Lawyer.

    A phone call is free to the CPA and Insurance agent -- preferably get some references.

    They will (should) know the Tax laws and will be able to help you with what you can and can not deduct as well as what is the best way to set up your company e.g. sole proprietorship, partnership, corporation, and S corporation, LLC. and what each of these offers.

    Contact an Insurance agent for your Insurance needs.

    http://www.irs.gov/businesses/small/...115045,00.html

    http://www.irs.gov/businesses/small/...=99921,00.html

    have fun reading


    Any good Lawyer will tell you straight up that you can be sued for anything- having Insurance does not release one from Liability or from Idiots.

    Leave a comment:


  • Guest's Avatar
    Guest replied
    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.

    Leave a comment:


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

    Leave a comment:


  • Flyingpig
    replied
    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.

    Leave a comment:


  • Flyingpig
    replied
    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.

    Leave a comment:


  • Grumpy
    replied
    Additionally a lawyer may prove useful.

    Leave a comment:


  • Broccoli1
    replied
    The people you should be talking to about insurance are Insurance folks

    It certainly is an interesting scenario.

    Leave a comment:


  • Guest's Avatar
    Guest replied
    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).

    Leave a comment:


  • MTBob
    replied
    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).

    Leave a comment:


  • Guest's Avatar
    Guest replied
    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.

    Leave a comment:


  • fun4now
    replied
    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.

    Leave a comment:

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