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RE: Was Health Insurance for Engineers - Now incorporation

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Like my firm attorney always says...

"The only important thing in a contract is the integrity of the parties
That sign it!"

You can have the most "iron clad" contract and if the owner doesn't
Want to pay you, he won't.

The contract, or "legal B.S." as you call it, makes no difference.

You still end up in court and most likely the LLC the owner created
Is now "bankrupt" and there are no funds to pay you anyway!

Or, according to my insurance guy, the owner then threatens to file an O/E
claim against you to scare you and try to make you go away.


David L. Fisher SE PE
Senior Principal
Fisher+Partners

372 West Ontario
Chicago 60610

312.573.1701
312.573.1726 fax

312.622.0409 mobile

www.fpse.com

-----Original Message-----
From: Kevin Polin [mailto:KevinPolin(--nospam--at)Cyberonic.com] 
Sent: Tuesday, June 07, 2005 2:23 AM
To: seaint(--nospam--at)seaint.org
Subject: RE: Was Health Insurance for Engineers - Now incorporation

I thought this was covering professional and personal liability?

Is there any real way to protect your self from professional liability
except for doing a good job and covering your basis? 

I have a Real Estate License and a Manufactured Home Dealers license
that are in my name and if I screw up, very simply the state of
California will take them from me. So I try and stay sharper than the
next guy.

When I see a engineering proposal that is 5 pages of legal mumbo jumbo
and 1 page or less of a project scope and price. I will pass every time.
The last two engineers that I chose were 1 page proposals and a price.
The 10 that I passed up had so much legal B.S., which I could not in
good faith use them. 

The liability should be spread between all parties involved in a
transaction, in good faith the liability should not all fall upon the
client or all upon the engineer. In a real Estate transaction especially
when buying VACANT LAND, FORECLOSURES, FIXER UPPERS if I feel that my
client is a little heavy on the liability side, I would rather cancel
the deal than expose myself or them to too much liability. It's just not
worth it.


In regards to personal liability, there are no simple answers to this
question. I don't think any one knows all the answers unless you've been
sued, and then again this opens up a whole other ball of wax which I do
not have the energy to discuss. 

We are not the only ones discussing this...
http://www.eng-tips.com/viewthread.cfm?qid=92621&page=1


Kevin
Los Angeles





-----Original Message-----
From: Scott Maxwell [mailto:smaxwell(--nospam--at)engin.umich.edu] 
Sent: Monday, June 06, 2005 1:46 PM
To: seaint(--nospam--at)seaint.org
Subject: RE: Was Health Insurance for Engineers - Now incorporation

Kevin,

You seemed to have missed a key point in Paul's message.  Incorporation
does little if anything with regards to potential professional
liability.
As engineers, our license and potential professional liability (i.e.
potential liablility that arises from doing professional engineering
services) are tied to individuals (i.e. the individual engineer) not
companies.  An individual engineer signs and seals the drawings not a
company.  This makes the individual engineer potentially liable if there
is a problem.  The company that the individual works for can (and likely
will) be pulled into it as well, but that does not shield the individual
engineer.

>From my research, Paul is right on point.  Incorporating does not
really
help for the potential professional liability related stuff.  It does
help/shield from other sorts of potential liability (i.e. the car
accident
that Paul cited or someone visits your property/office on business and
slips and falls, an employee sues for varioues things, etc).  Thus, if
you
are a professional engineer who is operating as a sole proprietorship
with
no direct employees, then there are not many reasons to incorporation
(or
form an LLC) and the benefit is minimal.  As soon as you want to expand
and hire employees than that changes.

The key thing that you seem to miss is that the "corporate shield/veil"
does not help with potential liability with regards to professional
services.

Regards,

Scott
Adrian, MI


On Mon, 6 Jun 2005, Kevin Polin wrote:

>
> A sole proprietorship is very dangerous for anyone even if a one man
> operation. A Sole proprietorship means that you are personally liable
> for anything that goes wrong, bad idea. No matter how you try and
slice
> it.
>
> I always recommend my clients that when they buy real estate primarily
> investment to place it in an LLC so that they are not personally
liable
> for problems or incase their neighbor or tenant decides to sue them
for
> a million dollars. This way the liabilities are limited to that piece
of
> property and not the others or any personal property. Also the tax
> deductions go beyond the 25K max deduction for losses against real
> estate.
>
> I was surprised to here that many geotechnical engineers do not own
> property because they are concerned about litigation and liabilities.
I
> understand that, but the way around that is buy the house, or transfer
> the house as a LLC and it is no longer personal property it is owned
by
> a separate entity. The owner is just a officer of the corporation so
> this shields the property from litigation. Some sophisticated Escrows
> Companies can handle the whole transaction or transfer from start to
> finish even registering the LLC.
>
> Although this is very complicated and I am not trying to write a book
> within this email but in a nut shell if you are not incorporated you
> should be. It's cheap and quick.
>
> Here is where I got my LLC. They are a solid company and have been
> around a long time.
>
> https://www.amerilawyer.com/sixreasons_discussion.htm
>
> https://www.amerilawyer.com/order.htm
>
> Kevin
> Los Angeles
>
>
>
> -----Original Message-----
> From: Paul Feather [mailto:pfeather(--nospam--at)SE-Solutions.net]
> Sent: Monday, June 06, 2005 11:03 AM
> To: seaint(--nospam--at)seaint.org
> Subject: Re: Was Health Insurance for Engineers - Now incorporation
>
> For a one man operation, there is very little benefit in incorporation
> as
> opposed to sole proprietorship.  This does not mean this is no
> additional
> protection, just the benefits are limited and only if you structure
the
> balance of your business to take advantage of the benefits.
>
> Incorporation does not provide protection for professional liability.
> However, there are limited tax benefits even for a one man show, as
well
> as
> shelter from other forms of liability.  If your company car is
> corporately
> owned and you are involved in an accident, your personal assets are
> protected whereas they would not be under sole proprietor, as an
> example.
> Talk to a good lawyer and tax attorney.  The critical aspect of
> corporate
> protection for a one man operation is the corporation is "closely
held"
> and
> the corporate shield can often be lost without proper separation of
> business
> and personal.
>
> If you have other people in the firm, incorporation is immediately
more
> beneficial.  All forms of job related liability other than
professional
> liability will be sheltered from your personal assets.
>
> In addition to liability and tax issues, incorporation also provides
an
> entity for transfer of ownership and a separate value in the event of
> the
> proprietor's demise.
>
>
>
> Paul Feather PE, SE
> www.SE-Solutions.net
> pfeather(--nospam--at)SE-Solutions.net
> ----- Original Message -----
> From: "Polhemus, Bill" <bill.polhemus(--nospam--at)tyson.com>
> To: <seaint(--nospam--at)seaint.org>
> Sent: Monday, June 06, 2005 10:34 AM
> Subject: RE: Was Health Insurance for Engineers - Now incorporation
>
>
> > -----Original Message-----
> > From: Gautam Manandhar [mailto:Gautam_Manandhar(--nospam--at)ci.richmond.ca.us]
> > Sent: Monday, June 06, 2005 12:20 PM
> > To: seaint(--nospam--at)seaint.org
> > Subject: Re: Was Health Insurance for Engineers - Now incorporation
> >
> > Jordon:
> >
> > You indicated that your are a one-man team and are incorporated.  It
> is
> > my understanding that because you are a one man team, the protection
> > from loss of personal property generally provided by incorporating
is
> > not avaialable for a one-man team.  Could you shed some light on the
> > benefits of incorporating.
> >
> > -----\Original Message-----
> >
> > Prior to my reading Joran's reply I'd like to put in one of my own.
I
> > was continually told by every CPA or attorney that cared to give me
an
> > opinion on the matter--free or paid--that there really was no
> advantage
> > for a single-person practice to become incorporated. In fact, you
> avoid
> > a whole raft of expenses like business licensing and even payment of
> > fees for "company registration" that has become all the rage among
> many
> > states now (and is, IMO, just an excuse to badger you for more
money;
> > "user fees" is the new taxation, often without representation since
> > often the enabling legislation doesn't address how much the fees
ought
> > to be, leaving that up to the bureaucrats. But I digress).
> >
> > Yet, just about every person I ask, that is in business, is
> > incorporated.
> >
> > I have finally concluded that "incorporation" is sort of like having
a
> > website or a set of business cards: It gives you a perception of
> > legitimacy.
> >
> > At least, no one, even among "the incorporated," has been able to
> > explain to me why they decided to incorporate other than in vague
> terms
> > like "it just seemed like I should."
> >
> >
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