insurance

[Brian Doepke]

Great!!  Thank you.

 

From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf
Of Bruce Dornfeld
Sent: Sunday, February 24, 2008 1:03 AM
To: pianotech
Subject: Re: insurance

 

Insurance and protection by forming a LLC is a subject that I wrote a little
about for the Economic Affairs Committee and ran in the Journal less than a
year ago.  Below is the article.   A couple of resources are mentioned, it
may be beneficial for you to take a closer look at some.

 

 
Cover Your Assets

Bruce Dornfeld, RPT

Economic Affairs Committee

 

 

People will try to protect what belongs to them in different ways when in
business.  Insurance is always the primary way, the first wall of
protection.  Insurance has limits depending on the policy and what it does
or does not cover.  Without adequate protection, in a worst case scenario,
your life savings, retirement accounts, house and all of your property are
potential targets for someone suing.  If your business is a corporation,
only the business assets are at risk in most common situations.

 

The number one reason people incorporate is limited liability.  As a sole
proprietor, your liability for business debt is unlimited; all of your
assets are at risk.  Forming a corporation, probably an S Corporation, or
limited liability company (LLC) makes your personal assets and your business
assets clearly separate.  This protects them from some types of risk, but
certainly not all.  Money your business owes its creditors or contractors
would be limited by forming a corporation or LLC.  This assumes that these
obligations were made by the company and not just in your name.  Always read
the small print!

 

Still, being a sole proprietor or partner may make perfect sense for you.
According to Incorporating Your Business for Dummies, "Many lawyers and
doctors are sole proprietors because state laws refuse to limit the
liability of professionals, especially when the matter involves professional
negligence or malpractice.  Perhaps your business is relatively small and
the product or service you provide is unlikely to create harm or damage.  If
so, limited liability would be unimportant to you."

 

Forming a LLC would not change how you pay taxes, but it is possible that
you could save money in taxes by incorporating.  Your corporation can pay
you a salary that would be taxed as normal income, but then can pay you a
dividend that is taxed at a lower level.  You would pay less Social Security
tax.  If your corporation provides you with health care or similar normal
benefits, they would be deducted from the business bottom line before taxes.
However, tax laws in recent years are being reformed to close some of the
loopholes that could motivate incorporating to save on taxes.  Corporations
also need to file taxes separately, making for a bit more work at tax time. 

 

There are initial costs to incorporate and quarterly paperwork also.  One
web page that can help you through the process is www.mycorporation.com
<http://www.mycorporation.com/> .  It is from Intuit, the same folks who
bring us Quicken, TurboTax, and QuickBooks.  Since the laws differ from
state to state, and they each set their own fees, the cost for incorporating
can vary from around $100 to $800.  

 

The more basic your piano service company is, the more likely you are best
off as a sole proprietor.  If you have a more complicated business, and more
liability concerns, then you should take a good look at the different
options of incorporating or forming a LLC.  Good business insurance is your
first and best protection.  The Safeco policies that have been developed for
the PTG are proven and hard to beat!  Be sure to review your policy and
consider growth or changes to your business, and don't forget good auto
insurance.  If you think incorporating your business might make sense for
you, look at the resources mentioned above and talk with a good lawyer who
knows the la! ws in your state.  Just make sure your assets are covered and
remember: the large print giveth and the small print taketh away.  

 

  

 

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