“someone really wants to they can still come after me personally even if the dispute is with the business”
Of course every state can and does have different statutes that define a business’s “corporate umbrella/veil” and the protection it gives to an LLC’s partners, share holders from personal liability. But my understanding having had an LLC in two different states it would be very difficult if not impossible for someone to go after, seize, put liens on the personal assets of a partner/share holder.
If someone were granted a monetary judgment that the LLC could not pay. The LLC would file for bankruptcy protection and its assets if any would be sold. Most small LLCs have little to no tangible assets. The company ceases to do business. Then the person is free to open a new business under a different name.
Without this protection the personal assets can be taken. If it is a property owner with equity in the property they can and well be forced to sell in most cases. This depends on how the property is deeded.
IMO anybody operating a business that has high liability exposes and horse businesses of just about any type surely does. One that provides lesson and or riding in general on one’s property high a much higher exposure especially if they cater to minors. A “release” doesn’t always provide nearly the protection that a lot of people think.
Another reason to operate as an LLC is for tax purposes. If you make $5,000 giving lessons you have to report that as ordinary income and pay taxes on the full amount. I don’t think you can deduct what it cost you to make that $5,000 on a personal income tax form. Feed, vet, farrier, etc can’t be deducted so you only pay taxes on what you actually put in your pocket. This is a question for your accountant. I don’t concern myself with these things because I have always paid someone else to know the rules and regs.
The major benifit of an LLC over forming a corporation is the fact you don’t have to file, pay to file two different tax forms. An LLC is a pass through entity to each partner/share holder if any. You don’t have to file personal and corporate tax forms. A lot less paper work and records to maintain also. Much cheaper to organize, you don’t need an attorney to fill out and file all of the documents needed to form a corporation.
But be it an LLC or corporation one still has to operate it as a business. A business with the intention of making a profit. In a usual and business like manner. The “corporate veil” can be “pierced” if proven otherwise in a law suit. The owner can be held personally liable for damages.
I am from Maryland but don’t know MD tort laws. I would check with your insurance agent to make sure you are fully covered for giving lessons. Make sure you have more than adequate liability insurance for offering lessons. Especially catering to minors. This is a much larger responsibility then just allowing boarder to ride on your property. You have complete control and judgement of your students actions on a horse. I would be surprised if you home owners insurance would cover this without an expensive additional “rider” attached to it.
In PA it wouldn’t be when I looked into it. We have a farm policy not just a home owners policy. The cost of insurance for a lesson program even a small one is very expensive. We decided it wasn’t worth the cost, the ends didn’t justify the means, the income.
If I were you I would thoroughly discuss your lesson program with an attorney that specializes in this area of Maryland law. Not just any ole attorney. He/she may be able to provide locked and sealed indemnity forms in triplicate for everyone to sign off on. It sucks but I have known, read, heard horror stories of people with good intentions being wiped out financially and emotionally.
