This video is in response to another great question I received from one of my viewers: If I am a sole-proprietor and have a $250,000 liability insurance policy, do I still need to form my business as an LLC? Or in other words, what’s the best route to protect my personal liability? An LLC or liability insurance?
Now, if you are a lawyer or have ever gone to law school, you will hopefully appreciate this answer. If not, then I am sorry that you can’t be in on the inside joke. But the answer to that question really is: “It Depends.”
It depends on a few factors, including the industry that you are going into and whether or not there is a lot of risk of lawsuits and liability within that industry. It also depends on your tolerance for risk. If you are willing to take a higher risk and save a little bit of money and administrative work, then it might be worth it to go one way or the other.
One of the main purposes of forming a business as an LLC is to give yourself that liability protection. To add, if there is any liability to the business, you as a person and as an individual are protected from that liability.