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View Full Version : How should he incorporate himself



Boozer
07-20-2004, 02:07 AM
My father just started a truckin company as an owner operator. Right now he's running as a self proprietor. I dont like him doing this due to the fact that hes hauling loads worth 60-70k and as a sole propietar he is full liable in the even that anything were to happen to a load.
What is the best way for him to incorporate himself and alleviate most of his own personal liability? I adivised to go the LLC route but I'm wondering if he should take another course of action.
Thanks in advance.

HighRoller
07-20-2004, 12:02 PM
Actually, what you're saying is not exactly true about him being liable for a load. First off, is he running under his own authority or leased to a carrier? If he has his own authority he already knows that nobody will put a load on his truck without him having a minimun amount of cargo insurance. 100K is the norm for this insurance but 150K will completely cover him pulling any load no matter what happens. Also, he needs to have a MINIMUM of 1 million dollars liability insurance on his truck/trailer if he's operating on his own authority.
If he is leased to a company it's different. They will provide him with cargo insurance and a certain amount of liability. He needs to check and see how much it is. He still is responsible for comp/collision coverage on his rig.
Incorporating is to protect yourself from general liability(Accidents etc..), not cargo claims. It is also to protect your assets from double taxation in many cases. While incorporation is a good measure of protection, it is not bullet proof. What your Dad needs to do is consult a good tax attorney, hopefully one who is familiar with incorporation, and pay the fee to pick the guy's brain for an hour. Make sure your Dad goes armed with a list of questions to ask. They attorney will be able to look at his situation and give him the best recommendation.
With all this in mind, I highly recommend the Owner Operators Independant Driver's Association (O.O.I.D.A.) out of Missouri. They have many resources, including legal, for their members. Membership is $45 a year and well worth it for a serious O/O. Look them up on the web, I think it's www.ooida.com or something close. Give your Dad their number and have him talk to them first. They are one of those rare organizations that stands behind drivers.

Boozer
07-20-2004, 01:05 PM
Thanks for the advice I will let him know.

HM
07-20-2004, 02:06 PM
Nevada Corp. Even with all the best insurance in the world, you are still at risk as an owner/operator.
Over time he can set up 2 corporations:
C Corp for all liablilities and an LLC for cash producing activities.
If he owes very little, then set up an LLC, but contact the people at www.nchinc.com (Nevada Corporate Headquarters).

C-2
07-20-2004, 02:39 PM
The reality is even if he incorporates or forms an LLC – if there was a catastrophic event, then it wouldn’t be that hard to “pierce the corporate veil” and prove the corporation or LLC is nothing more than an alter-ego (meaning he could be held liable anyway).
Like HighRoller said – insure the crap out of himself and he should be fine.
Incorporation requires annual returns and a minimum tax payment to the state FTB, so unless he is slick with books, then the heavily insured sole proprietorship would be the easiest route.
And not to argue with HolyMoly, but if he does decide to incorporate, do it in this state. Otherwise, he’ll have to “qualify” in this state as well, and will essentially be paying Nevada corporate fess and California corporate fees.