Re:Why you should probably have an LLC for side projects
by ams6110 on Tuesday September 14, 2010 @09:27PM
(#1692971)
I'm sure things vary state to state, but where I am you can form an LLC online at the Secretary of State website in 10 minutes, for about $100.
A couple of things I've been advised by my attorney (not that I'm giving anyone else legal advice...)
If you form an LLC but then don't operate it "seriously" (keeping records, having written articles of organization, etc) a court may nullify your "limited liability" protection.
The author states that "Unfortunately, the US is a litigious country and any idiot can sue you for anything." and while technically true, in practice it's not that easy. Outside of small claims, you can't file a civil complaint unless you hire an attorney, and in most civil litigation each side pays their own fees. There may be exceptions for gross negligence but that would be pretty hard to prove in a contract dispute for software development. So unless a fairly substantial amount of money is at stake it's not going to be worth doing. No good lawyer is going to bring a lawsuit that costs his client more than he can recover, and you also have to take into consideration the ability of the other party to pay (an LLC that has assets comprising a laptop computer and a few thousand dollars in the bank is not going to be a target for any litigation).
A couple of things I've been advised by my attorney (not that I'm giving anyone else legal advice...)
If you form an LLC but then don't operate it "seriously" (keeping records, having written articles of organization, etc) a court may nullify your "limited liability" protection.
The author states that "Unfortunately, the US is a litigious country and any idiot can sue you for anything." and while technically true, in practice it's not that easy. Outside of small claims, you can't file a civil complaint unless you hire an attorney, and in most civil litigation each side pays their own fees. There may be exceptions for gross negligence but that would be pretty hard to prove in a contract dispute for software development. So unless a fairly substantial amount of money is at stake it's not going to be worth doing. No good lawyer is going to bring a lawsuit that costs his client more than he can recover, and you also have to take into consideration the ability of the other party to pay (an LLC that has assets comprising a laptop computer and a few thousand dollars in the bank is not going to be a target for any litigation).