Sole proprietor or LLC

Matt,

Congratulations!

August 1 marked 6 years since I opened up my solo practice. I am a sole proprietor. I may eventually change my business structure, but for right now it keeps things simple.

One tip, make sure that you have commercial auto insurance. At the very minimum, make sure your auto insurance company knows you are using your vehicle for business purposes. There are horror stories about auto insurance companies denying coverage if they found out that the vehicle was being used for commercial purposes.

I had a friend that was using his dad's truck delivering pizzas. He was involved in an accident, and was denied coverage because he was using the truck for business purposes. He ended up loosing his license until he could pay for the damages to the other party's vehicle.

My daughter was hired to deliver pizzas. She had applied as a cashier, but they needed delivery drivers. I checked our auto policy, and they would not cover her. She had to turn down the job. The pizza place tried to tell her that the insurance company could not do that. These two examples are not survey related, but it does illustrate how some insurance companies are not looking out for you.

I had my ATV covered under a policy. I received notice that they were combining my ATV and auto policies into one policy. I stopped by and talked to an agent. I told them I wanted to keep the ATV separate for business expenses. He asked me if I was using the ATV for business purposes. I told him yes, that I used it to move my equipment around on farms, in the woods, etc. He advised me that they did not write commercial policies, and that is something happened, they could deny coverage. I asked him about the policy covering the ATV on the trailer at a hotel. He told me that if I had it on a business trip, they could deny coverage. I was Mad as Heck!

I covered the ATV on my inland marine policy, and it was much, much cheaper.

Feel free to contact me via email if you have any questions. I am no expert, but I will be more than happy to share my experiences.

Good luck,
Jimmy

Call your accountant and/or attorney for real advise for your state. You will get all kinds of conflicting comments from so many varied people and business models.

Good Luck!

There may be advantages to being an LLC for non-E&O liability but for tax purposes the IRS treats single member LLCs like sole proprietors. All income from the business gets reported on your personal taxes either way. LLC laws vary from state to state so its likely that only guys from Kentucky will be able to give you the best pointers.

You didn't mention who you contacted for your E&O quote but I would suggest contacting Candice Tickle with Insurance Service Corporation of America (800-853-6133). They're out of NC but they work with Surveyors, Architects, & Engineers nationwide. They've handled all of my insurance for years.

We opened up 16 years ago and went with a LLC , for the simple reason of protecting the personal assets if something should happen.

Get the advice of an attorney.

If you are looking to an LLC to actually limit your liability, be aware that creditors will still have you sign personally for bank loans, vehicle loans, etc. etc.

I did the LLC thing when I started up my business in 2000 because it was supposed to offer a small amount of additional protection if you get sued or go bankrupt.

I finally cancelled it 5-6 years ago because I got tired of the $100 annual fee and annual paperwork required. As mentioned, it makes no Federal tax difference vs. sole proprietorship..

I don't know if this is nationwide or state specific but I have had two attorneys tell me that a single professional license working under an LLC offers no personal property protection as the professional license defines who is liable.

My lawyer told me to stay as, LLC doesn't offer anything worthwhile.

I have a PLLC. I have it setup to be taxed as an SCorp. I pay myself a small salary and take the rest in K1 - 8% savings on everything over my salary.

There may be much more protection with a PC (Professional Corporation) than LLC. At first I had set things up that way, but the taxes where way higher for me.
Just a thought.

Having been there and done that, I'd be listening to Andy J. Get some serious legal input for tax issues.

Here as a soloist with no employees in AZ I'm a LLC but file as a sole proprietor. Everything is 1040 Schedule C. Not sure if that flies in your state. If you get employees life gets much tougher in the paperwork world. 1099 works good, but be very careful of what and who you distribute them to. The savings you think you get may bite you in the butt in the long run.

Best of luck to you... $0.02 worth

ATV inland marine coverage

I bought an ATV and went to have it insured by State Farm and they told me it was covered under my inland marine policy. It got stolen two years ago and when I reported it stolen, State Farm told me that it was covered by my inland marine policy. Two hours later, State Farm called and told me that it was not and could not be covered under an inland marine policy and was sorry for my loss. Since they told me it was covered when I first called to insure it and after quite a bit of back and forth, they had to pay the claim (I won't go into the details on a public forum). When I replaced the ATV with another ATV, I had to take out a separate policy on it and no company would cover it under an inland marine policy. You might want to get that inland marine coverage of your ATV in writing unless it is specifically mentioned in your policy.