Liability Insurance For My Gun Leather Business

[Go2Tex]

Sounds all well and good, but don't you pay corporate tax rates on an LLC?

[Randyc]

A business savvy friend of mine suggested something like this. Start TWO businesses. The holster making business (in this case) is incorporated or an LLC, thereby protecting your personal assets from lawsuit. The second business can be incorporated or simply be created with a "Doing Business As". This second business owns all the tools and tangibles and leases them to the incorporated holster making business. This way the holster business owns zero tangible assets so there is literally nothing to take.

My accountant girlfriend once told me that her business law instructor (a practicing corporate lawyer) called the LLC the best thing to ever happen for small businesses.

Bronson

Very interesting. I'm also a Licensed Private Detective in the State of Illinois. The state does require that I carry a 1,000.000.00 liability policy as a condition of licensing. I pay around $1,200.00 per year for insurance including a firearms endorsement. That business is registered with the county with a "Doing Business As."

It appears I can then register Bulldog Custom Gun Leather as an LLC and have my dba company own all assets. I own no real estate, drive a 10 year old car and 14 year old motorcycle. Outside of my clothes and tools, I own nothing so I have nothing to take.

I guess I can consider going on my happy way or form a LLC for the holster business.

Randy

[K-Man]

Sounds all well and good, but don't you pay corporate tax rates on an LLC?

It depends... Usually when you reach a certain income level, it's recommended that you switch over to an S-corp for tax purposes. You still maintain your LLC status with respect to everything else.

[Bree]

Sounds all well and good, but don't you pay corporate tax rates on an LLC?

Nope. You can select the type of organization that you want for your LLC in most states. Here in NY we can have a proprietorship LLC. Check your own state to see what they allow. Sometimes they have a special tax for LLCs.

For Texas here is a start for your info hunt:

http://www.sos.state.tx.us/corp/forms/205_boc.pdf

Edit: You can choose a corporate form for your LLC and of course you will pay corporate taxes. Just wanted to be clear.

Edited March 21, 2009 by Bree

[Randy Cornelius]

I have my home and farm insured through Farm Bureau, they sold me a business Liability rider that was not that expensive at all. Might look at something simular with your homeowners policys.

Randy

[Lobo]

I have my home and farm insured through Farm Bureau, they sold me a business Liability rider that was not that expensive at all. Might look at something simular with your homeowners policys.

Randy

Randy: I would imagine that what you have as a business liability rider deals with customers coming and going from your premises. The focus of this thread is around product liability, claims that your "inferior" or "dangerous" product resulted in some damage or injury elsewhere. Please speak with your Farm Bureau agent to clarify what coverage you may have.

[Lobo]

Generally speaking, either a LLC (limited liability company) or a subchapter S corporation provides an arms' length between the individual and the business operation; either one treats income as essentially a pass-through, personal income taxed at regular rates. There might be some benefit to having more than one, with assets owned in one entity and leased to the other, but I would imagine that an attorney looking for blood in the water would find arguments to the effect that all that really exists is a proprietorship.

EVERY STATE IS DIFFERENT, SO IF IN ANY DOUBT CONSULT A REPUTABLE ATTORNEY IN YOUR AREA FOR COMPETENT ADVICE. Offer to make him/her a nice holster rig as a retainer! I have made several holsters for attorneys (they seem to deal with some elements that cause them to be cautious).

The whole idea is to avoid the courtroom, and that is where insurance becomes most important. The insurance company has a vested interest in defending your business, so they will pay competent legal talent to deal with claims (whether or not they have any merit). In short, what we are paying for is legal defense, whether or not the plaintiff can prove a claim or not is of little consideration, legal defense is very costly.

Ugly thoughts about this whole line of discussion. We live in an country wherein nothing is ever anyone's fault until they find a deep pocket to blame it all on.

[Shorts]

A resource I have been using that was recommended to me by my father-in-law who is in business suggested I look to LegalZoom.com. As a matter of fact, as we speak I am reviewing their pdf guide to LLCs.

As Bree stated, they can be taxed as a C-corporation or they can be passed through to an individual(sole proprietorship or partnership).

Its important to understand what the Fed/IRS wants as well as what your state wants. By default an LLC is regarded by IRS as a pass through entity. So pay taxes at an individual rate. Unemployment taxes are not required to be paid. But self-employment taxes on any salary and company profits allocatedto them.

...gotta love those taxes

If you're a single member LLC ,you’ll report all your income or losses on your personal IRS 1040 form and attach a Schedule C, Profit

or Loss from a Business. You will also need to file a Schedule SE, Self-Employment Tax Return.

Anyway, as I said, I got this info from LegalZoom. They also offer services to get your business all set up with the Feds and State (for a fee plus the fees the state would charge you. Ex: TX LLC setup is $300). That is something you might want to use or do it yourself.