I'm considering consulting out of state. What kind of incorperation?

Jerry Feldman gaf at blu.org
Wed Jan 30 07:37:51 EST 2013


On 01/29/2013 08:27 PM, James A. Kuzdrall wrote:
> On Monday 28 January 2013 22:28:44 Bill Freeman wrote:
>> I have a potential gig on Long Island on a 1099, but will remain domiciled
>> in NH.  I figure that I should become a LLC or sole proprietorship or
>> something.  Suggestions?
>     I have been operating an engineering business in NH as a proprietorship 
> since 1971.  Most of my business is out-of-state or overseas.
>
>     I was sued in the 1980s for $5M, and in the process learned a lot about 
> how the system works - and you notice, I am still operating as a 
> proprietorship.  Since I haven't been sued lately, some of my data may be out 
> of date.
>
>     The purpose of a corporation is to protect people who invest in the 
> company but do not actively participate in it.  The stockholders of Samsung 
> will not have to pay Apple anything.  That is all it does.  Oh, there is one 
> more thing - it makes money for the state, accountants, and lawyers.
>
>     I had to counter-sue in response to the suit.  I told my lawyer it was of 
> no use because I knew the guy took all the money out of the corporation.  The 
> lawyer said it would take 10 minutes in court to break through the 
> corporation to his personal assets, and that is all it did take.
>
>     They put a lien on my house, but under NH law they could not take away 
> what I required to make a living.  The state does not want a civil law suit 
> making a pauper out of a contributing citizen.  My wife was co-owner of the 
> house and I ran my business from the house, so none of that was on the block.  
> Nor could they take me car or personal stuff like clothes.  (They might get 
> me Rolex, though, if I was vain enough to have one.)  So my savings and 
> investments were on the table, as were his.
>
>     It went to trial after 4 years, and I won the counter-suit - being talked 
> into a negotiated settlement by the lawyers.  That still has me angry, but 
> the story is too long for here.
>
>     A better protection than a corporation is a license of some sort.  As a 
> licensed Professional Engineer, a plaintiff has to prove I did something 
> wrong.  Un-licensed, I would have to prove I did everything right.  That is a 
> major difference!
>
>     Common certifications most likely don't have that force of law, but you 
> could probably convince the judge to view you as an expert and get a similar  
> break.
>
>     To avoid the taxes, professional fees, and paperwork, I am quite content 
> to stay a proprietorship.  (The tax write-offs are the same, of course.)
>
In the past I have done some 1099 consulting. In some cases, before a
business will hire a consultant they sometimes want that business
incorporated and insured.

-- 
Jerry Feldman <gaf at blu.org>
Boston Linux and Unix
PGP key id:3BC1EB90 
PGP Key fingerprint: 49E2 C52A FC5A A31F 8D66  C0AF 7CEA 30FC 3BC1 EB90


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