| Nov. 20 2008 at 10:42 AM |
|
|
|
I have a side business where I teach CPR and first aid classes. I also have another side business where I detail cars. What type of protection should I have? I've looked into professional liability insurance for the CPR classes, but not sure if that would cover the detail business too. I plan to grow both businesses in the next few years, but will probably still be a one man show. If you form an LLC, can you have different divisions under it?
Thanks!
|
| Nov. 21 2008 at 11:31 AM |
|
|
Given the extremely low costs of incorporating, doing so will always add an extra layer of security to almost any business activitiy.
On the other hand you’ll need to understand what potential liabilities you are seeking protection from. For instance, you’re detailing a luxury vehicle and scratched it. The owner is now demanding a $6,000 paint job. Are you liable for that? Personally you’re not. But how about your business? Of course it will be! So, be that as it may, you will have to work something out with this customer if you’re not prepared to loose your business over something like this. Liability insurance can help you do that.
Let’s take this one step further. You’re teaching a CPR class and certified one of your students. Your student later administers CPR to an accident victim, who later dies, allegedly because he wrongly administered CPR. The student however claims that he followed the exact guidelines you taught in your class, as a result of which either the student and/or the estate of the accident victim can bring a wrongful death or malpractice/professional negligence suit against you. The court rules in favor of the plaintiff and finds you liable in the amount of $400,000. What now?
With the right partnership agreement, you were probably indemnified from any potential liabilities for so long as your actions on behalf of the company were not criminal and you had no reason to believe that your actions weren’t in the best interest of the company. Chances are, you will be able to walk away from this without being liable. But your business will be on the line, and the plaintiff can still try to pierce your corporate veil and sue you personally.
If you have insurance, they would probably try to settle the matter, and if that can’t be done, they will cover you at least to some extent.
I guess the point, I’m trying to make is that the best way to curb or eliminate personal liabilities is to have both, a corporate structure and insurance.
I hope this helps.
Mark
Nothing is as powerful as an idea whose time has come.
http://www.FastVentures.com
|
| Nov. 22 2008 at 12:04 AM |
|
|
Very helpful. I'll start looking into what it takes to form an LLC. Thank you for your time!
|
| Nov. 23 2008 at 1:25 PM |
|
|
|
Check out our FREE entrepreneur guide as to how to start, operate and grow a business in today's web 2.0 world. We discuss the different advantages and disadvantages of numerous legal corporate formation structures, including LLC vs. S Corporations. You may find this helpful in determining your liability umbrella.
|
| Nov. 25 2008 at 1:37 PM |
|
|
Hi tulsa,
I use to teach CPR and First aid. As far as the CPR goes, you need to go back to the agency that certified you as an instructor. Ultimately, they will be the place were the buck stops since they certified you as an instructor. And, it's their standards you are teaching. You also need to teach only their standard of care in your classes. Deviate, and you may not have any protection in a lawsuit. Asked your instructor how the liability issue works. If he can't answer your question, ask him to put you in contact with the person that can. This is a common question that arises in the training field.
Also, some instructors have a liability disclaimer they give at the beginning of class. It won't prevent you from being sued. But it can serve as a layer of protection.
Edited by: nevadascul - Nov. 25 2008 at 1:40 PMGoals are attainable at any age. It just seems to take longer the older we get. - S. Patrick Culshaw
|
| Dec. 19 2008 at 11:14 PM |
|
|
You should both form an LLC and get insurance. The LLC will give you baseline protection against being personally liable for any business related debts and liabilities. The costs to form an LLC are so low and they were designed to give the simple small business this needed protection (small business lawsuits are an epidemic).
An LLC can operate multiple businesses but just know that all the assets held by the LLC will be at risk for any problems or liabilities created by any of the businesses. This is the case for general LLCs (not series LLCs which are a special type of LLC available in some states which allows for the segregation of liability).
However, because the LLC protections do not reach certain acts like personal negligence, your LLC should also get insurance. Insurance is not a complete replacement for an LLC because it too has exclusions, conditions and policy limits.
The third thing you should have is proper disclaimer and limitation of liability provisions in your documents you use.
If you want to learn more about the LLC, visit www.TheLLCExpert.com- an information and services portal for LLC business owners.
Amyli McDaniel
My Legal and Business Planning Blog:
Intelligent Biz Planning Blog
Follow me on Twitter
|
|
|