Construction business owners know the construction field has more than its fair share of liability risk. Prudence dictates an occasional review of the obvious in monitoring and managing a construction business, in order to make sure basic liability protections are in place to minimize the inherent risks. Owners’ personal assets will be exposed to risks in the construction business unless the business is operated as either a corporation, which can be a C corporation or S corporation for tax purposes, validly formed and in good standing under state law, or a limited liability company (LLC), which can be a disregarded entity if one member or owner, C corporation or partnership for tax purposes.
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Every contractor knows that a good foundation and building structure is essential to having a quality building. A poor beginning or lack of maintenance often spells trouble down the road. Among the basics when starting a construction business, an owner should determine what type of entity is best for liability protection purposes and for tax purposes. Basic considerations for liability protection include: both a corporation or a limited liability company (LLC) formed under state law generally limit liability to the value of assets owned by the corporation and avoid personal liability of the owner(s);
It is good to occasionally to review our basic business processes. For our construction clients, one of these processes to involve in a periodic review and renewed staff training pertaining to preparation and monitoring of construction contracts. More specifically, it involves an awareness of a company’s status as a specific type of contractor for purposes of qualifying to enforce Mechanics Liens and other payment remedies.