LLC or just an umbrella policy???

9 Replies

Hesitant to beat a dead horse, but maybe you're like me, steal struggling with the decision of starting an LLC or not. I'm still weighing my options and have not made a decision. However, from a liability standpoint I was surprised to find out I could get a $1M Umbrella Policy for 3 vehicles and 8 pieces of property for $295/year! I figure why not until I figure out this mystery behind should I or should I not start an LLC.

I'm going to speak with an attorney soon, and I'm "loaded for bear" as we say in my neck of the woods, but just so many questions keep coming up and I just cannot land on a conclusion on the subject of an LLC. I'll for sure follow up with my accountant too.

Two things though:

1. I wanted folks to know an Umbrella policy was pretty inexpensive (maybe I'm one of the few that didnt know that).

2. Anyone want to offer up any specific questions I should ask the attorney or my accountant on the subject of an LLC?

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@John Mark Pollard

One is not exclusive from the other. I have both.

You lost me on the vehicles being covered, this would not be the liability insurance required by state DMV which would cover injury, death or property damage if in accident? If so I would be suspicious since such policy coverage is based on driving record, credit rating, age, etc. I have had vehicle ins policies under a company and since they are subject to 24 hour operation with drivers who are not screened by the insurance company such coverage is always costly. So if you can get the legal automobile coverage required to operate on public roads for $259 per year I would be very interested in knowing where to sign up.

@Dante G. The vehicles are called out on the umbrella policy, but in order for them to qualify I had to have separate coverage for them (which I had anyways). Does that help any?

@John Mark Pollard

Keep in mind sole proprietors are not subject to the TN F&E tax while SMLLCs are.

That said, there are several F&E exemptions available especially for those who hold TN rental real estate in an LLC.

Talk to you tax pro.  So may people miss TN F&E obligations because TN has no individual income tax it doesn't even come to mind and just flies under the radar.

Originally posted by @John Mark Pollard:

@Dante G. The vehicles are called out on the umbrella policy, but in order for them to qualify I had to have separate coverage for them (which I had anyways). Does that help any?

Yes that now makes more sense...Thank you.

Originally posted by @Eamonn McElroy:

@John Mark Pollard

Keep in mind sole proprietors are not subject to the TN F&E tax while SMLLCs are.

That said, there are several F&E exemptions available especially for those who hold TN rental real estate in an LLC.

Talk to you tax pro.  So may people miss TN F&E obligations because TN has no individual income tax it doesn't even come to mind and just flies under the radar.

I never heard of TN F&E tax.  I hold rental real estate in TN in a (foreign) SMLLC that is registered in TN (and I pay the annual fee to do so).  

Does my tax pro need to file a form for this exemption or is it automatic?