Expert: Jonas M. Grant, Esq. - 11/6/2003

Question
thanks for taking my question.

I would like to start a SMALL computer consulting side business, where I go to customer's homes and setup their computers for them.

What are some cheap and simple ways I can use to protect my personal assets (home, car, etc) from lawsuits resulting from my business?

Answer
Ray --

There are basically 3 things you can do, the ideal situation being all 3 together:

(1)  Obtain business insurance to cover large claims.  To find out how cheap this is in your area, talk to some insurance agents.

and/or

(2)  Operate your business as a S or C corporation or LLC (which is better for you depends on a host of factors; consult an attorney for help) instead of a sole proprietorship.  Incorporating can also have additional benefits, including reduced risk of IRS audit, possible tax savings, a more professional image for clients and vendors (if any), easier to bring on additional shareholders / sell a part of the business, etc.  For more information on incorporating in any state, see my website at http://www.incorporatecalifornia.com

and/or

(3)  Have customers sign a contract which is drafted by an attorney to limit your liability to customers.  Probably the cheapest, though ultimately least effective, of the three options presented here; my one-time flat fee to draft such a contract would be around $300, for example.

Of course, there are costs involved with all 3 of these; however, (A) you must weigh that cost against the risk of exposure to your home, stocks, car, etc., (B) these expenses are tax deductible business expenses, and (C) if you can't afford any of these right now, then you may want to consider starting as a sole proprietor, then getting them done as soon as you can using money earned by the business.

I hope this helps and best of luck with your new venture.  Regards,

Jonas M. Grant, Esq.
Law Office of Jonas M. Grant, Esq.
http://www.incorporatecalifornia.com