Should I incorporate as an assistant instructor or instructor?

[Cutter1470]

I am just starting along the professional diving tract and plan to become an instructor in the next year or two. There have been a few discussions about instructor liability on the forums. I also know a couple instructors who have incorporated LLCs for tax purposes and liability reasons.
This has made me wonder if I should be considering doing the same. I am SSI, so I am affiliated with a dive shop, but it seems that neither that nor certifying agency membership may be sufficient to protect me or my personal assets in the event of an incident.
I was wonder what other professionals thought about this issue.

Thanks in advance


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[Bob DBF]

Sounds like you need to talk to an accountant and a Lawyer. May be an insurance agent as well as I don't believe an LLC will shield you from personal liability if say you are directly involved in an incident.

Good Luck and let us know what you find.


Bob

 

[ams511]

An LLC does shield a person from personal liability BUT not if the person sues you personally.

 

[Peter Guy]

In the legal world, there is a concept called "piercing the corporate veil" and it was created precisely to prevent individuals from incorporating, doing work and then avoiding liability because they are "a corporation."

NOTE -- I am NOT a specialist in this field so the following information is worth what you have paid for it.

My (perhaps uninformed) opinion is that anyone who is teaching scuba is subject to be held personally liable for any negligent acts regardless of the legal entity which they might have chosen to present themselves to the public. If you are John Doe instructor DBA (doing business as) John Doe LLC, you are still going to be perceived as John Doe.

OTOH, if you are John Doe LLC who hires Jane and James to work with you as instructional staff, if THEY make a mistake, you may well NOT be held to be personally liable as opposed to the LLC.

If you think about the logic of this, it would be very unfair for someone who is performing a personal service to absolve themselves of personal liability merely through the creation of a legal fiction.

 

[Wookie]

And what Peter said is why I not only have a professional liability policy provided to me by the boat I own and operate, I also have a personal liability provided to me by another separate insurer. I do this so that my insurance companies and certification agencies (2 agencies, 2 insurers) will have to work together to defend me. Not like in another well discussed case here on ScubaBoard where the instructor was insured by an insurance company that his agency did not sponsor.

It's hard to argue that I might be grossly negligent but the Captain of the boat isn't....

 

[ams511]

This may be beneficial. Beware of Tort Exceptions to Limited Liability | BizFilings Toolkit

 

[DivemasterDennis]

Dive Pro and Lawyer here. You can achieve some personal liability shield by being a corporation or an LLC, but only if you are fully insured at level appropriate to the profession and the scope of your oiperation. That is $1,000,000.00 minimum, perhaps more if you do volume or have others working for you. In addition, your must keep business and personal matters entirely separate. Also, you must adequately capitalize your operation- fund it with enought to operate, and retain enough capital to be a viable ongoing operation. There is of course much more to it, but on balance, if you are going to function as a professional and actually engage in for profit operations, incorporation or formation of an LLC is advisable. The law of such orgainzations is a mater of state law, so contact a Michigan professional when you are ready to go forward.
DivemasterDennis

 

[ams511]

Dennis, I find your advice counter to the article I linked, which basically said that if you perform the service personally then you could be found liable for negligence.

The owner will have unlimited, personal liability for torts when he or she:

• personally commits a tort, which is especially possible in a personal service business;
• is guilty of negligent hiring or supervision of employees; or
• hires agents or employees, or sells goods, in his personal capacity, rather than as an agent of the LLC or corporation

Consistent with this general rule, if the small business owner commits a tort while acting as an agent for his LLC or corporation, the owner is liable to the injured party. The fact that his LLC or corporation also will be liable is not relevant to the owner's personal liability.

 

[Cutter1470]

Sounds like you need to talk to an accountant and a Lawyer. May be an insurance agent as well as I don't believe an LLC will shield you from personal liability if say you are directly involved in an incident.

Good Luck and let us know what you find.


Bob

Making appointment to talk with both. I will definitely let you know what I find out.

Thanks for al the feed back.
Cheers!


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[DivemasterDennis]

Dennis, I find your advice counter to the article I linked, which basically said that if you perform the service personally then you could be found liable for negligence.

The owner will have unlimited, personal liability for torts when he or she:

• personally commits a tort, which is especially possible in a personal service business;
• is guilty of negligent hiring or supervision of employees; or
• hires agents or employees, or sells goods, in his personal capacity, rather than as an agent of the LLC or corporation

Consistent with this general rule, if the small business owner commits a tort while acting as an agent for his LLC or corporation, the owner is liable to the injured party. The fact that his LLC or corporation also will be liable is not relevant to the owner's personal liability.

This is a very simplistic statement, that ignores many factors. Of course, no one is exempt from liability if they are grossly negligent, act in a manner indicating a wanton disregard for the safety of other, and so on. This is not an area to make decision in based upon "sound bite" input. Moreover, liability limitation is one, but not the only, reason, to form a professional entity like an LLC or corporation. Carry your research deeper.
DivemasterDennis