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Construction Company Structure

May 29, 2008  |  from Markup and Profit Blog

Something to consider if your construction company is an LLC.

LLC stands for Limited Liability Corporation. That works both ways.

I am not an attorney, but I can tell you what several attorneys that understand construction and many insurance brokers and agents have told me. You have limited liability, yes, but you also have limited coverage.

If you are in construction, there is an excellent chance you will end up in a disagreement with a customer at some point in time. Almost all of the contractors that I have talked to who chose to use an LLC did so because it was cheaper to get their company set up and running. None of our customers ever take that approach on jobs, do they?

I had one insurance broker tell me he thought attorneys pushed the idea of being an LLC because they knew that when the fight started, the contractor would come back to the attorney and spend 100 times more to defend himself than if he just set up a C or S corporation to begin with. That’s more cynical than I want to be, but the overbearing question is, “Is it worth the gamble to find out?”

If you have an LLC, make sure you completely understand what protection you have. And you might consider changing to a C or S corporation.

Filed: Interesting