Liability Insurance?

This type of insurance is usually only for insurance sales or other sales specific industry where leaving out or forgetting to include information to the buyer could cause them harm. Specifically Insurance Sales where saying things like guaranteeing coverage when the reality due to pre existing condition or past behaviour they may or may not have told you causes denial of coverage.

Or someone buys life insurance through you, they die shortly after but the coverage ends up getting denied thus the claim by family wife or next of kin is refused.

Regular Internet Marketing, Article Marketing, Affiliate Marketing etc... I can't see any reason Errors and Omissions would apply.

If you have blanket coverage I would think that would be what you need. House Insurance would NOT protect your business or activities on the internet, UNLESS you have customers visiting you at your house and they happen to trip or fall on the property.

You need, from my understanding, specific liability coverage that handles lawsuits from 3rd parties relating to your business activities. This would go in line with LLC, S-Corp or whatever you have. LLC and other legal instruments are not specific for tax advantages, many do have them but mostly are for protecting your personal assetts from that of your business.

BUT the thing is, unless you specifically are doing business as your LLC, S-Corp and make that the contact point. Tell JV partners they are dealiing with your LLC, S-Corp or whatever and not you personally. Blog, create forum posts as the legal entity and not you personaly... The legal advantage may not be there and you personally can be sued AND your legal entity can be sued if attached to whatever activity.

Say you do a JV with someone in california and you are in Montana, Just making an example I don't know where you are from, the JV goes sour and the other person decides to sue you. You put it onto your legal entity to protect you. The JV partner sues you personally and not your legal entity. What happens in that case? OR they sue Both you personally and your legal entity.

I don't know, I am not an attorney and am only giving my personal view in this post based on my own due diligence and research though I don't know your specific situation so I can only post to a generic example.

I believe that laws changed earlier this last decade that puts the responsible parties of the legal instrument, You, your wife, mother or whoever is associated to the legal instrument as responsible. A real person, usually You and anyone else liable. They can't put a legal instrument in Jail but they can You and anyone else associated, if something shady goes on with the business. Not paying taxes or whatever. I don't know but there are many things that can happen and the courts want a real person there to be the responsible party and not some faceless corporation.

I am sure Madoff and most of the people that went to prison for fraud over the last 10+ years had a company, LLC, S-Corp or whatever as their business entity. The business didn't go to prison, they personally did.

That is why you really must talk to a lawyer experienced not just in setting up assett protection but also competent in the type of business you are doing. It helps to have a business plan so the lawyer can look at what all is going on and plan for many possibilities though noone will be able to guess them all.

That is why umbrella coverage is important but depends on the insurance because some situations wont cover Business related activities, some only You personally. If you are just doing business on internet, do not have a physical location then that is different than having an office in an office building. If you plan to in the future get an office then you need to talk to your insurance agent then to change coverage.

If you are not making any money now at all from your business, or online activity I personally would wait until money was being made before setting up such things but that is just me. You need to do what is right for you and the situation you are in and will be in, in the future.

My 3 cents.

- Terry

I encourage you to consider creating an S Corp instead. Here is my non legal non qualified personal research opinion (hire a lawyer to help you figure this stuff out... it sounds like you could use some good solid legal and business entity advice from a qualified licensed individual)...

Even with insurance and an LLC you may still risk unlimited personal liability if you do not:

1. Use an EIN instead of SS number for all business operations.
2. Keep all your finances absolutely separate and never use business accounts or cards for personal and never use a PayPal debit card for personal etc.
3. Keep the business accounts properly capitalized to cover reasonable liabilities.
4. Ever use your personal name for branding ie. doing business with you vs the business.

Its just far too easy to pierce the veil as an LLC.

LLC really do not offer that much advantages to individuals and are often used by corporations for other holdings because the income is passed through.

With an LLC you do not get any tax advantages... income is pass through, people still have to provide you 1099, and you pay higher taxes just like sole proprietor.

There are tax advantages to incorporating... I dig a quick search and found this short blurb explaining it a little...

Tax Benefits of an S Corporation

And you get the liability protection of the entity if you manage it right.

See, this is where I get confused. I have heard this said before and I think this is what my accountant was getting at.

However, I've also read online that "piercing the corporate veil" is not that common for LLC's unless you do something silly (like personally guarantee repayment of debts or use your name instead of your company's name).

And in concept, an LLC should offer at least some more protection than being a sole proprietor; after all, it can't be called a "Limited Liability" Company for nothing!

So, bottom line... still not sure what to do, but I'll do more research.