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Freelance CFI-- LLC or Sole Proprietorship

Frmr Avro Drvr

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This is for any of you career freelance instructors out there.

Which is the better way to go? Limited Liability Corporation or a Sole Proprietorship? Does the LLC really provide any liability protection outside of creditors. It appears to me that lawsuits for damages don't fit under the liability protection umbrella.

I am just starting to get smart on all this and would appreciate any opinions.
 

midlifeflyer

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Frmr Avro Drvr said:
Which is the better way to go? Limited Liability Corporation or a Sole Proprietorship? Does the LLC really provide any liability protection outside of creditors. It appears to me that lawsuits for damages don't fit under the liability protection umbrella.
You are right. The LLC doesn't provide any liability protection except for creditors (and that's assuming you do everything right and creditors don't insist on your personal guaranty).

I think there's a marketing benefit though. Having a "company" gives some folks the impression that you're more than a one-person operation.
 

Frmr Avro Drvr

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Hey midlifeflyerThanks for going out of your way to hit me on both boards. I guess I will continue to think it through.

Avro
 

goaliemn

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Check on becoming a subchapter-s corporation. I did that as it has been used in the past to provide liability protection. They have more of a history and have been used more in court.

They're just as easy as an LLC, if not easier. I have 3 of them that I use for various ventures.
 

F16fixer

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same thing

Hello,
My wife organized an LLC for me when I started a corporate flying job. I then used it for my flight instruction as well. The lawyers thought this would be the best route. Why, I still don't really know! I went to see an accountant, and he thought it was a waste of time and money forming the company. If you have a single member LLC, it is the same thing as a sole-proprietorship as far as taxes go. Like others have said, I don't think the company helps me legally if someone gets hurt. I think it would help more along the lines if your a bone head with your check book and credit card.
Just my .02

Good luck and go talk to your accountant.

Why don't you fly the Avro anymore?
 

midlifeflyer

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goaliemn said:
Check on becoming a subchapter-s corporation. I did that as it has been used in the past to provide liability protection. They have more of a history and have been used more in court.
The comment I made earlier about an LLC applis equally to a corporation. In fact, I'll repeat it:

The corporation doesn't provide any liability protection except for creditors (and that's assuming you do everything right and creditors don't insist on your personal guaranty).
 

Frmr Avro Drvr

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F16fixer said:
Why don't you fly the Avro anymore?
After my third furlough notice from Mesaba and the fact I was getting married for the SECOND time, I decided to take a job as an Avionics Systems Engineer with Smiths Aerospace. An almost 3X bump in salary wasn't hard to take.

Basically, I made the decision to make my family life number one and my love of flying number two. Now that I have my family life well established I am working on getting number two back in the picture.

I have worked on systems for the B-1B, 787, 767 Tanker and A380 in my short 2 1/2 years here so it hasn't been boring.

Thanks for the comments.
 

User546

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Great topic. I'm not real educated on these type of things, and I've been considering creating a LLC, or corporation to do my freelance instruction under.

My biggest issue is I have a large amount of assets that need to be protected from someone who might have a training or airplane accident and then turn around and sue me for whatever the reason.

What type of entity should I set up to protect all my assets, and keeping my assets inaccesible in the event I ever get a lawsuit filed against me?
 

midlifeflyer

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User997 said:
Great topic. I'm not real educated on these type of things, and I've been considering creating a LLC, or corporation to do my freelance instruction under.

My biggest issue is I have a large amount of assets that need to be protected from someone who might have a training or airplane accident and then turn around and sue me for whatever the reason.

What type of entity should I set up to protect all my assets, and keeping my assets inaccesible in the event I ever get a lawsuit filed against me?
The idea that a corporation, LLC or some other business entity can protect someone from liability for his own actions is an incredibly common misconception.

There is =no= form of business operating entity that will keep your assets inaccessible in case of an accident that you get blamed for.

Period. No ifs, ands or buts.

There are some legal maneuvers that will accomplish the purpose of protecting assets, but they all involve giving away your assets so that they are out of your control, such as transferring all of your major assets to your spouse or children or to certain types of trusts. Not to be taken lightly, that's something that you need to go over with a qualified attorney.

For most, insurance is usually the only realistic answer. The coverage for independent CFIs (who are not using their own airplanes) is not that expensive, but is also not very high in coverage amounts. But it's typically high enough to cover your legal defense expenses and, unless the accident is truly catastrophic and liability clear, the easy offer of insurance is usually enough to cool the hots of the most ardent plaintiffs' lawyer.
 
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