swoopfly 7 #1 June 11, 2014 just curious if its a common place for a DZ to require you to be an LLC to work for them? Quote Share this post Link to post Share on other sites
DougH 270 #2 June 11, 2014 Not uncommon. Just trying to build a case for us being "contractors". What sucks is many states have expensive minimum taxes for LLC's, and frustrating secretary of state registrations and fees. Would they settle for you getting an EIN?"The restraining order says you're only allowed to touch me in freefall" =P Quote Share this post Link to post Share on other sites
TomNoonan 1 #3 June 11, 2014 As Doug said, its not uncommon. Whether its as an EIN or an LLC, or a corporation, the pros and cons vary from state to state. I am not a lawyer, but if you have assets that you would like to protect in the event of an injury based lawsuit, you may want to investigate the differences between working under an EIN, LLC or Corporation.Namaste, Tom Noonan www.everest-skydive.com Quote Share this post Link to post Share on other sites
DougH 270 #4 June 11, 2014 I am no lawyer either, but I don't think any structure is going to offer much protection against lawsuits. Any vehicle you establish isn't going to be sufficiently capitalized, and you as the employee of that organization can be sued as well. Forming a corporation, and then hiring yourself isn't going to protect you from a lawsuit when you the employee has an accident with a customer. The best protection you can give yourself is doing things by the book, leaving safety margins."The restraining order says you're only allowed to touch me in freefall" =P Quote Share this post Link to post Share on other sites
Andy9o8 2 #5 June 11, 2014 DougHI am no lawyer either, but I don't think any structure is going to offer much protection against lawsuits. Any vehicle you establish isn't going to be sufficiently capitalized, and you as the employee of that organization can be sued as well. Forming a corporation, and then hiring yourself isn't going to protect you from a lawsuit when you the employee has an accident with a customer. The best protection you can give yourself is doing things by the book, leaving safety margins. Incorporating oneself (or forming an LLC, etc.) may indeed offer some level of protection of one's personal assets from liability, if it's done right. It varies with the state and the circumstances. If the worst case scenario is an instructor or rigger having his/her personal assets, real estate, etc. placed in jeopardy due to an incident, incorporating or LLC'ing may act to lessen or even avoid the worst case scenario. I'm purposely speaking in broad generalities. The best way to decide what, whether and how to do, is to have a live sit-down with an attorney who practices in your particular state. (Taking legal advice on this from anyone who is not an attorney may lead you in a harmfully wrong direction for your particular circumstances.) Quote Share this post Link to post Share on other sites
TomNoonan 1 #6 June 11, 2014 Quote The best protection you can give yourself is doing things by the book, leaving safety margins. That of course goes without saying, but it is important to realize that there are a number of things that can go wrong on a tandem jump that are entirely beyond your control and your safety margins, like aircraft incidents for example, where you will still be exposed to a substantial level of liability acting as the tandem instructor on the jump. Organizing one's business model to the extent that it best protects you from liability is an additional layer of protection. The waiver that tandem passengers signs typically includes protecting the instructor and anyone involved in the tandem skydive, however it has been shown in the past, and will again in the future, that the waiver is not impenetrable.Namaste, Tom Noonan www.everest-skydive.com Quote Share this post Link to post Share on other sites
swoopfly 7 #7 June 11, 2014 It was in my understanding that creating a company as you said seperates your personal assets from the companys. So in the case of a lawsuit, they will be suing a company that may not have much to take from as opposed to taking everything you own. Quote Share this post Link to post Share on other sites
swoopfly 7 #8 June 11, 2014 Also i thought you have to have an LLC to get an EIN? Quote Share this post Link to post Share on other sites
TomNoonan 1 #9 June 11, 2014 QuoteIt was in my understanding that creating a company as you said seperates your personal assets from the companys. So in the case of a lawsuit, they will be suing a company that may not have much to take from as opposed to taking everything you own. Yes, that is my understanding of it as well. As has been the case in the past, when an attorney files a frivolous lawsuit, they tend to cast as large of a net as possible looking for assets to go after. If you have nothing they can legally go after, you become less promising of a target.Namaste, Tom Noonan www.everest-skydive.com Quote Share this post Link to post Share on other sites
SethInMI 174 #10 June 11, 2014 I am no lawyer either, but I am of the understanding that Doug has. Here is the key paragraph from this nolo article: http://www.nolo.com/legal-encyclopedia/limited-liability-protection-llcs-a-50-state-guide.html Personal Liability for Your Own Actions There is one extremely significant exception to the limited liability provided by LLCs. This exception exists in all states. If you form an LLC, you will remain personally liable for any wrongdoing you commit during the course of your LLC business. For example, LLC owners can be held personally liable if they: personally and directly injure someone during the course of business due to their negligence fail to deposit taxes withheld from employees' wages intentionally do something fraudulent, illegal, or reckless during the course of business that causes harm to the company or to someone else, or treat the LLC as an extension of their personal affairs, rather than as a separate legal entity. Thus, forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business. If both you and your LLC are found liable for an act you commit, then the LLC’s assets and your personal assets could be taken by creditors to satisfy the judgment. This is why LLCs and their owners should always have liability insurance.It's flare not flair, brakes not breaks, bridle not bridal, "could NOT care less" not "could care less". Quote Share this post Link to post Share on other sites
skytribe 17 #11 June 11, 2014 I think more of the issue with dropzone requiring LLC etc. and using instructors as independent contractors is more to avoid having claims on there workman's comp insurance. I know the last place I worked required you to provide proof of workman's comp for them to pay you. It triggered an audit by the state virtually every year as the owner and sole employee the workman's comp was worthless to me. After explaining why I had it the state official would leave me be. My current DZ is currently having issues with a workman's comp claim which was re-opened despite the instructor in question re-injuring himself over the winter when he wasn't working. This increases rates for DZ and often why DZ's chose to employ instructors as Independent contractors rather than employees. Quote Share this post Link to post Share on other sites
BIGUN 1,314 #12 June 11, 2014 swoopflyAlso i thought you have to have an LLC to get an EIN? You do not. You can be an individual or a sole proprietorship and file for an FEIN. You can get it today. http://www.ein-gov.us/?gclid=COGsmvK08r4CFbRj7AodkxQAbgNobody has time to listen; because they're desperately chasing the need of being heard. Quote Share this post Link to post Share on other sites
snofun 0 #13 June 11, 2014 3 of the 5 DZ's I worked at last year required a signed contract with my FEIN. I have maintained a type S corporation since 1988 for reasons shown me by my personal lawyer. 1 DZ also required access to my business bank account for electronic deposit as well as me writing 3 checks for services at that DZ. That was to maintain and prove proper Contractor status. I also have a current 7 page contract that I try to have negotiated and signed before working at any DZ. Appendix A states the conditions and payment type and schedule. All approved by my current business attorney. Ahhh, for the good ole days when cash and a hand shake was all that was needed. Quote Share this post Link to post Share on other sites
AnalMike 0 #14 June 12, 2014 Andy9o8 has already said it, but the conversation continues somewhat down this path. Creating an LLC, or an S-corp, or even signing a contract that states "I am operating as an independent contractor" likely will not hold up in your state. Check with your lawyer that is licensed in your state...generally courts look at, and the IRS sure does, HOW you actually operate and not how you SAY you operate. Big difference when you get sued and think that you're covered because you have a contract that says you are an IC or you created an LLC "so I'm fine." Don't let anyone not licensed to practice law in your state convince you otherwise, including all of us here!Anal Mike HEE HAW!!! http://www.droguedonkey.com Quote Share this post Link to post Share on other sites
GD64 1 #15 June 13, 2014 Not addressing your question, but commenting about LLC's from my business experience. Minimal, if any protection in lawsuits. Main reasons I see..... Bias judges who use their power in court to engineer outcomes. "The law be dammed". Another reason.....you can only throw out so many potential jurors. Jeeez....."a jury of your peers".....you have to be bullshitting me! Some are sleeping, some don't understand English let alone math, economics, (usually factors in lawsuits). I believe a justice system of trained professional jurors would be better (their full-time job). Then there is the lawyer aspect...... Out of respect for Andy (whom I've never met, and any other lawyer on the forum), I'll pass on commenting. Bottom line for me is LLC's and Corp's are pierced with ease. My company uses" big city" experienced five-hundred dollar an hour litigators, but if any of the above factors mentioned come into play, you will have a serious financial decision to make. Roll the dice and appeal, or pay the "blood money" (even when 100% innocent) and move on........not easy to do. Just my .02 worth. Quote Share this post Link to post Share on other sites
stayhigh 2 #16 June 13, 2014 Is there any DZ that doesn't require LLC?? Likely they are paying cash under the table. I wanna work there.Bernie Sanders for President 2016 Quote Share this post Link to post Share on other sites
peek 21 #17 June 13, 2014 stayhighIs there any DZ that doesn't require LLC?? Likely they are paying cash under the table. I wanna work there. Most of the smaller ones don't. They just have instructors sign an "independent contractor" statement as a precaution. Of course they risk having the IRS disagree and try to make them treat the contractors like employees, but the IRS is too busy to bother with most of them if they are small. Quote Share this post Link to post Share on other sites
lanceav8r 0 #18 June 14, 2014 An LLC will not shield you from liability as an instructor. The party suing will file against both the LLC and also file against you personally. Also the employment board will see through this ploy. This is an uninformed DZO. Quote Share this post Link to post Share on other sites
swoopfly 7 #19 June 14, 2014 stayhighIs there any DZ that doesn't require LLC?? Likely they are paying cash under the table. I wanna work there. Well i have worked for 4 DZ that dont require you to own a company to take someone on a skydive, it was a 1099 under my SS. Quote Share this post Link to post Share on other sites
AnalMike 0 #20 June 16, 2014 Some DZ's as a policy could require you to be an LLC but filing a 1099 under your SSN is in essence the same thing (paying somebody as an IC and not as an employee of the DZ), there are just legal differences that have been discussed above (i.e. potential to be somewhat protected from lawsuits seeking to take your personal assets). If someone sued you and you didn't have some type of corporate protection, then they can go after your personal assets much easier than if you do have some type of protection.Anal Mike HEE HAW!!! http://www.droguedonkey.com Quote Share this post Link to post Share on other sites
chuckakers 425 #21 June 18, 2014 DougHI am no lawyer either, but I don't think any structure is going to offer much protection against lawsuits. Requiring staffers to be an LLC or corporation isn't typically for liability concerns. It's usually a DZO's way of substantiating to the IRS that they are contractors rather than employees.Chuck Akers D-10855 Houston, TX Quote Share this post Link to post Share on other sites
DougH 270 #22 June 18, 2014 chuckakers ***I am no lawyer either, but I don't think any structure is going to offer much protection against lawsuits. Requiring staffers to be an LLC or corporation isn't typically for liability concerns. It's usually a DZO's way of substantiating to the IRS that they are contractors rather than employees. Well aware. Really I think the big hurdle is state workers compensation insurance rules, instead of just the employer's FICA %. If the state says that all employees must have workers compensation, and there are no commercially affordable solutions then you are stuck. I am a CPA that focuses on Corporate taxation. Despite what the local lawyer told the DZO, the IRS thinks that they are full of shit, regardless. I have heard 100 different ways to "structure" a contractor relationship. Rig rentals from the DZ, invoicing the instructor. If the numbers were big enough and there was an audit all of those things would be cast aside because the facts and circumstances are that we are almost always employees. It isn't a big issue for smaller drop zones because they are off the radar to some extent. But detection risk isn't the same as having a valid position! "The restraining order says you're only allowed to touch me in freefall" =P Quote Share this post Link to post Share on other sites
swoopfly 7 #23 June 30, 2014 So is legal for a DZ to refuse to pay you for your work jumps if you dont have an LLC and EIN? I kinda thought being a subcontractor you can run your business as you see fit. But this is the boat i have been put in now. Refuse to pay an individual but will give me my money if i am an LLC. Yet hired and made money off an individual. Thoughts? Quote Share this post Link to post Share on other sites
Andy9o8 2 #24 June 30, 2014 swoopfly So is legal for a DZ to refuse to pay you for your work jumps if you dont have an LLC and EIN? I kinda thought being a subcontractor you can run your business as you see fit. But this is the boat i have been put in now. Refuse to pay an individual but will give me my money if i am an LLC. Yet hired and made money off an individual. Thoughts? Nobody here said that. It's legal for a DZO to refuse to hire/engage you to make work jumps if you don't have whatever it is they require you to have. But if you've already made the work jumps, I'd predict 9 out of 10 judges will say that the DZO has to pay you for them, one way or the other, under most circumstances. If a DZO is refusing to pay you for work jumps you've already made, lawyer up. If the value of what you're owed is too low to make that practical, then haul him into small claims court yourself. But, if the potential longer-term consequences to your reputation & future employability (even if that's unfair) from hauling him into court are worse than the short-term loss from him stiffing you, then let it go and get on with your life. Quote Share this post Link to post Share on other sites
skytribe 17 #25 June 30, 2014 This doesn't happen to be a certain DZ in the Northeast ? Well known for making it difficult to get paid for work already done.... Quote Share this post Link to post Share on other sites
