Is It Necessary to Become an LLC? What did you do about your business setup?

[W.Fovall]

and what if a space ship land on your head....
llc is overkill for anyone making less then $5k a year doing this..

 

[colnago1331]

That's true, because if you make less than $5,000/year doing photography you can never be held personally liable......

 

[W.Fovall]

i run a million dollar a year company and its not a LLC.. its a DBA. carry a 5million $$ liability insurance policy... been to court many times and never had a issue with them taking my camera.. that just silly... there are laws in place to prevent the courts from just seizing your property... this is just silly...
LLC is generally if you have 10 or more employees and make allot more then charging your friends $60 to take there picture in the park..

 

[colnago1331]

I don't care if you run a billion dollar company. An LLC isn't about the size of your business. An LLC - and really any business entity - is about protecting your personal assets and keeping them out of reach of anyone who might sue you on the business side. It's nice that you can afford a $5M GL policy; most people can't afford that. Especially people making $5,000/year from a side business doing photography. And, btw, $5,000/year (which you seem to think is the magic number) isn't charging your friends $60 to take their picture in the park. It's one $500 job per month for ten months.

You are right about one thing . . . well, kind of. There are laws in place to prevent the courts (well, not actually the courts, but rather plaintiffs) from just seizing your property. It's called the US Bankruptcy Code. And you don't want to have any part of that if you don't have to.

 

[W.Fovall]

ok here you go..
in the instance you are just getting a LLC just to cover your butt and just run it like a home business the LLC is pointless.. you CAN and usually will be personally responsible for any debts that you inquire. plus your equipment is no longer yours, it it belongs to the company and you will loose all your gear either way.. and you get to pay the average of $800 annual tax fees plus a bunch more fees and cant just take all the profits to do what you want with..

[h=2]Piercing the Corporate Veil[/h] Above we discussed the ways you can voluntarily make yourself personally liable for a corporate or LLC debt. However, a creditor can also try to go after your personal assets by eliminating the limited liability protection provided by the corporation or LLC. This is commonly referred to as piercing the corporate veil.
The corporate veil is usually pierced if the creditor can show that the corporation or LLC was a shell created only to provide liability protection for its owners or the company was practically inseparable from or an alter ego of its owners.
Courts will be more likely to pierce the corporate veil if:

• Corporate formalities, such as holding annual meetings and keeping minutes, were not followed.
• Certain owners exerted too much control over the corporation or LLC.
• Owners commingled personal funds with company funds or used personal funds to satisfy company obligations.
• The company was not sufficiently capitalized when it was formed.

 

[colnago1331]

ok here you go..
in the instance you are just getting a LLC just to cover your butt and just run it like a home business the LLC is pointless.. you CAN and usually will be personally responsible for any debts that you inquire. plus your equipment is no longer yours, it it belongs to the company and you will loose all your gear either way.. and you get to pay the average of $800 annual tax fees plus a bunch more fees and cant just take all the profits to do what you want with..

Yes, you're going to be personally liable for the debts you acquire most likely because a creditor (a bank, for example) isn't going to loan money to a newly-founded LLC without some personal guaranty from the LLC member(s). But that's a far different thing than being personally liable for the damages you cause while working for/as your LLC. Let's not confuse voluntarily acquired debt with accident-based legal liability. These are two different animals.

Piercing the Corporate Veil

Above we discussed the ways you can voluntarily make yourself personally liable for a corporate or LLC debt. However, a creditor can also try to go after your personal assets by eliminating the limited liability protection provided by the corporation or LLC. This is commonly referred to as piercing the corporate veil.
The corporate veil is usually pierced if the creditor can show that the corporation or LLC was a shell created only to provide liability protection for its owners or the company was practically inseparable from or an alter ego of its owners.
Courts will be more likely to pierce the corporate veil if:

• Corporate formalities, such as holding annual meetings and keeping minutes, were not followed.
• Certain owners exerted too much control over the corporation or LLC.
• Owners commingled personal funds with company funds or used personal funds to satisfy company obligations.
• The company was not sufficiently capitalized when it was formed.

And that's why I said....

You absolutely want to start an LLC or similar type business. Anyone who doesn't leaves himself personally exposed. And not just what he owns. His future earnings could also be at risk. Insurance is great - definitely get it. But your insurance only protects you up to the limit you choose, and it may not protect you at all.

<snip>

In the alternative, you set up an LLC. Generally, so long as you keep your LLC's finances completely separate from your personal finances, your personal assets are protected in the above situation. You might lose the photography equipment as it may be considered to be owned by the LLC, but your house, car, etc. are likely protected.

<snip>

Finally, in addition to getting insurance you should also have a strong Operating Agreement for the LLC (even if you're the only member of the LLC), and you should run your LLC as the Operating Agreement requires. Doing this along with keeping finances separate help insulate your personal life from your business life.

<snip>

**The preceding is not intended to be, nor should it be considered to be, legal advice**

Red added for emphasis.

I would never advocate just forming an LLC. That would, indeed, be stupid and very unlikely to protect anyone. But if you form the LLC, separate your finances (i.e. separate bank accounts, obtain an EIN from the IRS for the LLC, etc.), obtain separate insurance for your LLC, and have in place and follow a strong operating agreement then you will, in all likelihood, be protected from personal liability.

 

[W.Fovall]

you have to take in the information that 99% of the people on here are very small time just shooting the people around them for very little money... its like telling the girls selling lemonade on the corner to get a LLC just incase.

ok here you go..
in the instance you are just getting a LLC just to cover your butt and just run it like a home business the LLC is pointless.. you CAN and usually will be personally responsible for any debts that you inquire. plus your equipment is no longer yours, it it belongs to the company and you will loose all your gear either way.. and you get to pay the average of $800 annual tax fees plus a bunch more fees and cant just take all the profits to do what you want with..

Yes, you're going to be personally liable for the debts you acquire most likely because a creditor (a bank, for example) isn't going to loan money to a newly-founded LLC without some personal guaranty from the LLC member(s). But that's a far different thing than being personally liable for the damages you cause while working for/as your LLC. Let's not confuse voluntarily acquired debt with accident-based legal liability. These are two different animals.

Piercing the Corporate Veil

Above we discussed the ways you can voluntarily make yourself personally liable for a corporate or LLC debt. However, a creditor can also try to go after your personal assets by eliminating the limited liability protection provided by the corporation or LLC. This is commonly referred to as piercing the corporate veil.
The corporate veil is usually pierced if the creditor can show that the corporation or LLC was a shell created only to provide liability protection for its owners or the company was practically inseparable from or an alter ego of its owners.
Courts will be more likely to pierce the corporate veil if:

• Corporate formalities, such as holding annual meetings and keeping minutes, were not followed.
• Certain owners exerted too much control over the corporation or LLC.
• Owners commingled personal funds with company funds or used personal funds to satisfy company obligations.
• The company was not sufficiently capitalized when it was formed.

And that's why I said....

You absolutely want to start an LLC or similar type business. Anyone who doesn't leaves himself personally exposed. And not just what he owns. His future earnings could also be at risk. Insurance is great - definitely get it. But your insurance only protects you up to the limit you choose, and it may not protect you at all.

<snip>

In the alternative, you set up an LLC. Generally, so long as you keep your LLC's finances completely separate from your personal finances, your personal assets are protected in the above situation. You might lose the photography equipment as it may be considered to be owned by the LLC, but your house, car, etc. are likely protected.

<snip>

Finally, in addition to getting insurance you should also have a strong Operating Agreement for the LLC (even if you're the only member of the LLC), and you should run your LLC as the Operating Agreement requires. Doing this along with keeping finances separate help insulate your personal life from your business life.

<snip>

**The preceding is not intended to be, nor should it be considered to be, legal advice**

Red added for emphasis.

I would never advocate just forming an LLC. That would, indeed, be stupid and very unlikely to protect anyone. But if you form the LLC, separate your finances (i.e. separate bank accounts, obtain an EIN from the IRS for the LLC, etc.), obtain separate insurance for your LLC, and have in place and follow a strong operating agreement then you will, in all likelihood, be protected from personal liability.