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I am about to be starting in the home inspector business in the near future. I am in TX where E&O insurance is a must.

Well, what I was wanting to know is are most inspectors here have their business as a LLC or sole proprietorship?

Would me holding E&O insurance kind of take the risk away if I go the sole proprietorship way?

What are you?

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I'm NOT a lawyer but I will tell you what my lawyer said.

First he asked if I believed in Murphy's law

I said yes.

Then he asked if I wanted to lose my house.

Every time I would say "but I have E&O", or anything else he would interrupt with.....

"Do you want to lose your house?"

He did that until I got the point.

With an LLC, the ability to lose your house because of a Business mistake are drastically less than any other form of affordable business type.

So I too say LLC.

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Greetings!

Your long term goals make a difference. If your goal is to build a rockin' business...to grow, add employees, make money and build assets...I would definitely recommend an LLC or a Sub S Corp. (They are pretty similar in structure. Visit with your CPA about the differences and what's good for you.)

One good thing about a corporation is the "corporate veil." You can keep your personal assets away from the company. Good in case of a lawsuit. Again, visit with your CPA about what it takes to maintain that veil. [:-thumbu]

xo$, Ellen - www.barebonesbiz.com

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"Do you want to lose your house?"

He did that until I got the point.

With an LLC, the ability to lose your house because of a Business mistake are drastically less than any other form of affordable business type.

That's exactly the opposite of what mine told me.

He said, "If you're the one performing the inspection, you're the one responsible".

I was also told that Employees of an LLC were a different story.

If you read the court docs in the other thread, I think you'll find that the judge was also in agreement with that way of thinking.

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When I started my business I went to a lawyer and he sugested a Sub S corp, which we set up. I believe as far as protecting ones assests an LLC and a sub S corp are about the same, but they have different tax pro / cons. For example my company will pay up to $xxxx of medical bills for its employes (that would be me) each year.

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You are picking a tough market time to start HIs and in a tough and competitive market (Houston metro).

I used to live/inspect that area for many years.

As a licensed TREC HI (I assume you have your license) you already have E&O as you can't get your license without that document from your carrier. Having E&O doesn't matter if you are a corporation or a sole proprietor. From a customer view it's a moot point and I've yet to win/lose a job because of E&O. Albeit ... when the first words out of a potential client's mouth are asking me if I have E&O coverage and/or how much ... all of a sudden my calendar is "very full".

I strongly echo what Les suggested. Contact your legal representative and learn from him/her on what is recommended for your business.

As HIs we all have observations/opinions and the majority of us rely on our respective legal representation.

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As many others here have said you need a lawyer.

That said, I'll propose an argument for a simpler organaization. This is a tough time to start a business, and HI is a tough business to start up. Most new HIs will keep their day jobs while they build their business. At this point your exposure to risk is relatively small; greater exposure as you gain experience but smaller history equals lower risk overall. In NY a sole proprietor filing costs around $40, has few tax complications, and you remain eligible for unemployment insurance benefits from your day job with some income restrictions (LLC or S corp officers are not eligible for UI). The safety net of a regular pay day, health insurance and UI benefits, as well as reduced start up costs offered the best asset protection for my start up. It would be foolish to protect my assets at the expense of protecting the income that pays for them. Reorganizing at a later date is always an option.

BTW, I am still fighting collection agencies over a cell phone bill from 9 years ago that belongs to a now defunct S corp. The corporate veil isn't bullet proof.

Tom

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The very best limiter of your liability is education/knowledge. Second best is be sure your client likes you. Return phone calls asap. Never be a "know it all".

Often the upset client will call someone like me and pay for my help in the process. Inspection process knowledge plus a knowledgeable atty will equal trouble for any business model. Don't bs your client and you will be fine.

Did I mention going to your atty? You know the one that will defend you!

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The very best limiter of your liability is education/knowledge. Second best is be sure your client likes you. Return phone calls asap.

Yes. Know what you need to know. Read the client and work your ass off until it's clear they're impressed. Never, ever appear to be "hurrying" the job. Return phone calls, regardless of time of day or night.

That's risk management.

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