Thread

I would love to see a free flow of information about something that a lot of small business owners are bound to run up against. Recently I have been giving a lot of thought to the business side of what I do. I know that for 2008 I need to pay more attention to the income/ouflow of money from my business and the legal aspects of owning a web design business. So here goes.

How many of you are an LLC?

How many of you that are LLCs carry liability insurance?

If you are not an LLC do you carry liability insurance instead?

Do any of you know of any professional associations that web designers can be members of that would give us access to healthcare insurance, liability insurance and some of the other things that people with 9-5 jobs get by being an employee?

I ask these questions because we are getting advice from our CPA that runs contrary to what one would normally think. His statement is that if I get liability insurance then I do not need the additional cost of an LLC. An LLC is designed to protect some of your personal assets from lawsuits and sue happy lawyers/people. If I get liability insurance on my own it is not that expensive but it is almost the cost of forming the LLC. And the whole healthcare issue has been resolved but you know how that goes… it is so expensive that you are always on the lookout for something that could save you thousands…

Anyway, I am sure some of you have run into this as your businesses have grown. I am curious as to what advice you are getting.

M.

OK… so maybe not 😉

M.

I ask these questions because we are getting advice from our CPA that runs contrary to what one would normally think.

You should probably get the advice of a lawyer in addition to the accountant.

This varies from one person to the next and from one state to the next.  Laws are changing all the time.  The choice of someone going solo is different from a partnership or hiring employees.  Your decision also needs to be partly based on the future plans of your business.  This question is not easily answerable here.

I think for anyone self-employed the high deductible health plans with health savings account might be a good option.  Your premiums are lower and you can place money into the savings account tax free.  Many banks (such as WellsFargo) offer such a savings account along with a debit card to access it.  If you are one of those people who never need medical care you can load up the account to take care of your deductible and then enjoy the lower monthly payment until you need to tap into the account (still tax free if you use it for medical purposes.)

John, I agree on the health savings account. We have one with United and it has been great. The interest rate is not all that bad and it doubles as a retirement account (albeit a slow growing one) if you never need it.

Plans for my business? Well… that is a crazy question. I ponder this often as I am definitely busy enough for myself and the part time person I have working with me. I do no marketing other than word of mouth. I definitely feel that if I leaned into it a bit it could be something bigger. I am looking towards the LLC mostly for the credibility (say what you will but it communicates a level of professionalism to your clients) and the liability protection.

Anyway, I just found out that I can form a LLC for about $75. In my mind that is a no brainer… Liability insurance would be 5x that much..

Anyone else?

Oh and lest anyone think I am being frivolous in asking the question here I have consulted two CPAs, another consultant and have a call in to an Attorney.  😉 Just trying to see what others that might be in a similar situation have done.

Cost and difficulty of setting up an LLC or even a corporation is never an issue.  I setup a corporation at one time for around the same cost and some relatively easy paperwork.  I would probably still have the lawyer handle the paperwork for you. 

I don’t know of any pro associations for web designers but you can take a look at the freelancers union

We had our tax guy setup an LLC - IIRC it wasn’t even $75. I looked at it as the cheapest liability insurance available. 

I had extra liability insurance for a while when a client required it, but have since let it go as it looking at the policy it didn’t really seem applicable (not working on-site, not working on business-critical applications etc).