Independent Contractor Liability

[vdo]

CA,

I am planning on starting my own IT Consulting Practice. I realize that its probably better to go the LLC route however, I wanted to start contracting work to get a good sense of the demand before I setup a LLC.

Therefore, what are the legal liabilities when you work as a independent contractor under a sole proprietor structure? Can the contract limit your liabilities or if someone wants to sue it doesnt matter? The work I will be perform has a certain degree of risk where it might cause potential outages and I want to protect myself. if case clients seek finical compensation.

Thanks!

 

[RuGa]

LLC or what??

The whole purpose of the LLC or corporate structure is specifically to separate your personal finances from your business. If you go the 'sole proprietor' route, you leave yourself wide open for lawsuits. As a corporate structure takes all of $300.00 or so to create, I'd say it's worth the time & money for the protection it affords.
Keep in mind that if you do do an LLC you can still 'file' your taxes as if you and the business are the same while limiting any personal liability in regards to the business itself...