Asked in Business Formation for Alabama

Q: As a sole proprietorship (side business, appliance repair) is there a way to shield myself legally w/o an LLC?

I only do 3 or 4 jobs a month. Is an LLC worth it?

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1 Lawyer Answer
Michael Ray Smith
PREMIUM
Michael Ray Smith
Answered

A: A disclaimer: I'm not an Alabama attorney, and this isn't legal advice. For a real legal opinion, you should consult an Alabama lawyer who will be familiar with all the nuances of your state's law.

That said, I err on the side of setting up LLCs to conduct almost any sort of business. I think the potential benefits almost always outside the relatively minor cost and administrative burden of starting and running a limited liability company.

If you had employees, it would be a no-brainer. The answer would be, "Get it done, now." That protects you, as the owner, from the negligence of your employees. It's not quite as compelling when the owner does all the work because the LLC cannot protect you from liability for your own negligence. If you're the one who messes up and causes someone's basement to flood, you're liable because you're the one who messed up, even though you were doing the work under the umbrella of a limited liability company. (The protection for that sort of liability is a good insurance policy.) Even so, the LLC can protect you from other types of liability (such as for the breach of a contract between your LLC and someone else, unless you also personally guarantee the contract). In addition, it sets you up from the beginning in case this might turn out to be more than something you do on the side.

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