Benefit to an LLC?

[wngarner 0]

Ok, so I started this thread in general discussions and someone thought it was better suited for the Instructor forum. Here's the short of it...

While mulling over some LLC documents for a different business of mine and talking to a family member about skydiving this weekend after thanksgiving dinner - it was brought to my attention that I didn't really know the legal/financial liability of an instructor on a student jump where something goes wrong? I mean what protection is there for the instructor if the worst happens on a student level jump? Can anything stand between the student or their family and your and your family's financial security?

Of course this is something that no instructor would ever want to be a part of, litigation or not, but its something I felt warranted asking about. Anyone out there have any ideas or experience regarding this liability issue?

Thanks!
whit

- ever the spazz

Your work is to discover your world, and then with all your heart, give yourself to it...

[JohnRich 4]

Previous thread:

"Liability as an Instructor"
http://www.dropzone.com/cgi-bin/forum/gforum.cgi?do=post_view_flat;post=3262506;so=ASC;sb=post_latest_reply;#3262506

[diablopilot 2]

JP's formula for calculating liability as a skydiving instructor:

Step 1. Calculate your net worth, for most full time instructors this will be a number best represented by using a RED sharpie marker, and since they can't afford the marker, they'll have to borrow the one from manifest.

Step 2. Compare your net worth with the DZO's, the Gear manufacturer's, the USPA's, the airport owner's, the aircraft manufacturer's, etc, and the insurance policies that may or may not be carried by the above mentioned persons/entities.

Step 3. Place your self in the ranking of "named parties" according to your net worth, for most full time instructors you'll probably be somewhere near the bottom of the list, followed only by the "99 John or Jane Does"

Step 4. Scrap all the above work and realize you're fucked financially just by being "invited" to a trial, regardless of the outcome.


Seriously, the second best protection is to do everything by the book and never let yourself be pressured into doing otherwise. I guarantee anyone who does pressure you to do so will not waste any time or method getting out from in between you and the prosecuting attorney if they can.

However if you're willing to risk all of that, your instructional ratings will be some of the most rewarding things you've ever done.

----------------------------------------------
You're not as good as you think you are. Seriously.

[wngarner 0]

Thanks to you both!! These are exactly what I was looking for :)

- ever the spazz

Your work is to discover your world, and then with all your heart, give yourself to it...

[BMFin 0]

About LLC and liability :

Someone suggested LLC protects your assets or even from a criminal prosecution.. not true..

Google the words piercing the corporate veil

Like with anything in life, just do everything downright and you wont have to worry about legal issues.

If you do, then you need to consider moving to another country. (obviously your country isnt a Rechtsstaat if this is the case)

The question it self is too wide to be answered sufficently. Its like asking, if Im driving a car what are the possible scenarios that might get me sued ?

[tdog 0]

I once asked my insurance agent (for one of my non-skydiving businesses): Can I be sued for that???

He said - "Yes, you could be sued for wearing the wrong color tie. Would it stand up in court? Probably not. Would you pay a lawyer to convince the judge tie color is not a crime. Yes..."

He then told me a story:

"True story. My customer was a porta-potty provider. He delivered a blue plastic portapotty to the sidewalk in front of a home, not even on the property. The contractors who shit in the toilet also built a shitty foundation.

The homeowner purchased the home and found the foundation needed to be rebuilt.

The homeowner pulled the general contractor's records as part of the discovery process and sued EVERY contractor who provided goods and services.

Insurance companies won't go to court for less than $10,000 or so...

So the porta-potty company paid $10,000 to fix the foundation, so did the electrician, the roofer, the drywaller, the tile guy, the plumber, the landscaper, the engineer, etc... Get enough $10,000 settlements - and you got yourself a new $150,000 foundation!"

End of true story.

So I disagree with JPs assessment... Just because you are bottom of the list on assets doesn't mean you are not going to be looked at in a lawsuit. If they can get $5,000 from you it is $5K more than they had. They will claim you have assets, like your rigs to sell, even if you are a homeless DZ bum.

I think more important than the LLC vs Sole Proprietor vs Corporation argument is the DZ waiver and how you conduct your business as an instructor.

DZs with crappy waivers are not instructor friendly as the lax attitude by the DZO will expose the contractors/employees... Does your DZs waiver name contractors and instructors along with the DZO as the named parties???

All that being said, a properly run LLC can't hurt...

[diablopilot 2]

Quote

So I disagree with JPs assessment... Just because you are bottom of the list on assets doesn't mean you are not going to be looked at in a lawsuit.

Never claimed that. Simple logic says go for the deepest pockets that can't get out of the way first, then mop up the rest.

No matter what, you loose.

----------------------------------------------
You're not as good as you think you are. Seriously.

[Skwrl 56]

Quote

a properly run LLC can't hurt

This is true. It's not as easy to pierce the corporate veil of a well run corporation or LLC as one might think. The problem is that a lot of people don't run their legal entities well. For example, you need to maintain books and records of the LLC as if it was a separately running business. Do you have minutes of meetings? Do you maintain separate bank accounts? Or do you mingle funds of yours with funds of the LLC's? Do you hold yourself out as an LLC to the people who you are providing services (instruction) to? There's a ton of ways to screw it up.

A side note: if you set up an LLC, you want to make sure you're still referenced as a beneficiary of the dropzone's waiver. I've seen some waivers that talk about waiving liability for the DZO and his employees... But in this case - and in a lot of cases, I gather - the instructors aren't employees but independent contractors...

Also, make sure you have a good tax accountant if you're setting up a multi-member (i.e., more than one owner) LLC - partnership tax is tricksy, to say the least.

/not legal advice.

Skwrl Productions - Wingsuit Photography

Northeast Bird School - Chief Logistics Guy and Video Dork

[AndyMan 7]

Quote

Step 1. Calculate your net worth, for most full time instructors this will be a number best represented by using a RED sharpie marker, and since they can't afford the marker, they'll have to borrow the one from manifest.

Step 2. Compare your net worth with the DZO's, the Gear manufacturer's, the USPA's, the airport owner's, the aircraft manufacturer's, etc, and the insurance policies that may or may not be carried by the above mentioned persons/entities.

Step 3. Place your self in the ranking of "named parties" according to your net worth, for most full time instructors you'll probably be somewhere near the bottom of the list, followed only by the "99 John or Jane Does"

Step 4. Scrap all the above work and realize you're fucked financially just by being "invited" to a trial, regardless of the outcome.

Of course, this risk profile can change dramatically for part time instructors. Step 4 becomes even more pressing.

_Am

__

You put the fun in "funnel" - craichead.

[jasonRose 0]

I was going to set up a LLC this year for the sole purpose of putting a buffer between me and assests should something go wrong during a skydive.

After legal council I set up a SP for tax purposes. In the state of Washington a LLC will not protect your assests if you are the person performing the service. That being said if you have employees then you may recieve a little buffer with a LLC depending on the circumstances. I have been told the only thing that provides any glimps of personal protection is the waiver if is tailored to your state laws. However that will not keep you out of the court room nor does it prevent family members from sueing your ass off.

In short your fucked if someone wants to sue you for providing bad services. Stay on the up and up and ask your DZO if the waiver they use is valid with your state laws.

My 2 cents....

Some day I will have the best staff in the world!!!

[jasonRose 0]

Of course, this risk profile can change dramatically for part time instructors. Step 4 becomes even more pressing.

_Am


Hmmm..... Was this jab at part time instructors???

Some day I will have the best staff in the world!!!

[AndyMan 7]

???

not in the slightest. I am a part time instructor.

__

You put the fun in "funnel" - craichead.

[wolfriverjoe 1,523]

Quote

Of course, this risk profile can change dramatically for part time instructors. Step 4 becomes even more pressing.

_Am


Hmmm..... Was this jab at part time instructors???

Part time instructors usually have "real" jobs, homes, cars, ect. And insurance policies.

IOW assets. That are attractive to PI attorneys.

"There are NO situations which do not call for a French Maid outfit." Lucky McSwervy

"~ya don't GET old by being weak & stupid!" - Airtwardo

[jasonRose 0]

Roger that...

In that case I am even worse....

NEW, part time instructor....

Some day I will have the best staff in the world!!!