Legal Stuff...

[raptorman]

I can't give an intelligent response to this. I suspect the nature of the claim might have some bearing on it. You may be absolutely right, but I suspect the officers of the corporation will have some liability. (Is there a lawyer in the house?)

Either way, I believe the better way to limit my liability is with a contract. I use a contract for weddings, since the amount of money is substantial and emotions would be high (to say the least) if something goes wrong. There's no good way to do additional photography to complete a wedding contract. And, being such a personal, emotional event, I'm certain an angry couple would want to punish me in the worst way, making it their new hobby to get it done.

My wedding contract is VERY brief, outlining the payment schedule and stating that if I fail to deliver, my liability is limited to the refund deposits paid.

-Pete

What will you do if the court invalidates your limitation of liability clause? (under Belgian law a clause limiting your liability to the refund of deposits paid wouldn't stand a chance in court when used against a consumer, but that's also because under Belgian law, consumers are considered idiots who can't read or think for themselves so our government does it for them)

The combination of a well written limitation of liability clause, using a LLC, PLC..., a good insurance, using common sense, good advisors... will greatly reduce the risk of doing business when used altogether.

 

[Christie Photo]

What will you do if the court invalidates your limitation of liability clause? (under Belgian law a clause limiting your liability to the refund of deposits paid wouldn't stand a chance in court when used against a consumer, ...

Well, I suppose I'll just come back here and stay the hell out of Belgium.

Like I said, my contract is quite simple... quite plain. No legal mumbo jumbo. The courts in the US tend to hold BOTH parties to contractual agreements.

But no matter. It wouldn't take a court order for me to make any reasonable remedy to satisfy a customer that I let down.

-Pete

 

[KmH]

Besides your regular business license, is there anything else needed to charge for your work?

That depends on the state and county you live in and they all have their little ins-and-outs.

You need to consult with a local attorney to know what's required where your business is.

Where I live, they don't require a business license, but they have a commercial property tax, and for that reason it's against the law to run a business out of your home.. The only requirement for selling is having a state sales tax account and collecting/paying the applicable sales taxes to the state.

 

[Shelly1204]

I'm not sure why this is always cited. What sort of liability do we need protecting from?

It's always cited because it's a good idea. I'm not trying to dig at you, but I think the reason you don't see it as a good idea is because you don't really understand what the purpose of a corporation is. Again, this is not a dig, I know sometimes the business end of things can be confusing.

Yes... a corporation is a separate legal entity, but that simply makes the corporation and it's officers liable. Guess who they are. If I fail to fulfill any contract, I'm liable.... incorporated or not.

This is incorrect. One of the purposes of forming and doing business as a corporation is to insulate you from personal liability. For instance, if you screw up someone's wedding, and they sue you for a million dollars and win, and you do not have a corporation, the winning party can collect their judgment from your personal assets (seize your house, car and belongings and sell them at auction, etc.). If they sue your corporation for a million and win, you simply dissolve your corporation and walk away. For the $150 or so that it costs to form a corporation, why not protect yourself?

 

[Christie Photo]

Where I live, ... The only requirement for selling is having a state sales tax account and collecting/paying the applicable sales taxes to the state.

Hey, Keith...

Is there a tax on the sale of photography in Iowa? Illinois is a bit goofy, in that we have a choice of how we collect tax. The actual "service" portion of our sales is not taxable. We can either call out any merchandise (including lab prints) and tax it fully, or we can tax 10% of the total invoice.

-Pete

 

[Christie Photo]

I'm not trying to dig at you, but I think the reason you don't see it as a good idea is because you don't really understand what the purpose of a corporation is. Again, this is not a dig, I know sometimes the business end of things can be confusing.

Oh... no problem. I didn't take it as a dig. I'm asking for clarification. I'm sure you know that's not the only reason to incorporate.

One of the purposes of forming and doing business as a corporation is to insulate you from personal liability.

This does (not) always work... especially when the corporation is small, with officers like me as president and treasurer and my wife as secretary and vice president. My accountant just told me that the veil of a corporation is often pierced in law suits.

My studio was incorporated when I opened. We did it for some tax considerations. Later, it was no longer necessary and I dissolved the corporation to eliminate the mandatory meetings and records.

Being incorporated is not sure protection of personal assets. You can still get bit.

A million dollar business policy is fairly cheap. I think mine is less than $600. I doubt it covers screwing up a wedding, but I am protected if someone trips over a stand... a bigger worry for me.

-Pete

BTW... I see you're out on the island. I'm a Rockland native.

 

[Shelly1204]

This does always work... especially when the corporation is small, with officers like me as president and treasurer and my wife as secretary and vice president. My accountant just told me that the veil of a corporation is often pierced in law suits.

My studio was incorporated when I opened. We did it for some tax considerations. Later, it was no longer necessary and I dissolved the corporation to eliminate the mandatory meetings and records.

Being incorporated is not sure protection of personal assets. You can still get bit.

Ahh, now I understand. You're taking legal advice from your accountant. No wonder you're confused.

What you're referring to is a term called "piercing the corporate veil". It's a very rare situation where essentially the business would have to be running a criminal enterprise in order to hold the organizers personally liable (think Bernie Madoff). If you're not planning on committing any crimes in the name of the corporation, it's not something to worry about. Seems like it just makes things more confusing.

Now if you just don't like mandatory meetings and records, there's other business structures to consider, but that's a discussion for a lawyer, not an accountant.

Liability insurance is always a good thing. But chances are the OP doesn't need it just yet. He'd probably rather pay $150 to protect himself than $600. But it's good to put all the cards on the table.

 

[Christie Photo]

You're taking legal advice from your accountant. No wonder you're confused.

Now I AM confused. Are you a lawyer?

-Pete

 

[burnws6]

This does always work... especially when the corporation is small, with officers like me as president and treasurer and my wife as secretary and vice president. My accountant just told me that the veil of a corporation is often pierced in law suits.

My studio was incorporated when I opened. We did it for some tax considerations. Later, it was no longer necessary and I dissolved the corporation to eliminate the mandatory meetings and records.

Being incorporated is not sure protection of personal assets. You can still get bit.

Ahh, now I understand. You're taking legal advice from your accountant. No wonder you're confused.

What you're referring to is a term called "piercing the corporate veil". It's a very rare situation where essentially the business would have to be running a criminal enterprise in order to hold the organizers personally liable (think Bernie Madoff). If you're not planning on committing any crimes in the name of the corporation, it's not something to worry about. Seems like it just makes things more confusing.

Now if you just don't like mandatory meetings and records, there's other business structures to consider, but that's a discussion for a lawyer, not an accountant.

Liability insurance is always a good thing. But chances are the OP doesn't need it just yet. He'd probably rather pay $150 to protect himself than $600. But it's good to put all the cards on the table.

Best advice on here, and I had just gone to the county tax collector to do this before I saw your post. It was 130 to Inc btw.

 

[Shelly1204]

You're taking legal advice from your accountant. No wonder you're confused.

Now I AM confused. Are you a lawyer?

-Pete

Yes, I'm a partner in a law firm in NY, although business structures isn't my "thing" (my firm specializes in consumer defense and copyright defense litigation).

Best advice on here, and I had just gone to the county tax collector to do this before I saw your post. It was 130 to Inc btw.

:thumbup: Awesome.