Insurance Situation

John Doe Jr.

New Member
Jurisdiction
Washington
Situation

Am an operating partner to a couple of companies all held by the same corporate group. Am paid on a 1099 basis (but have yet to receive compensation). Originally, I set up a Delaware LLC with office location in Washington State to protect myself. I am presented to the outside world as an officer and a director of the company. But I am not a salaried employee.

Now the company has expanded and other operating partners have asked for directors and officer insurance. The company will purchase such insurance.

Am I better off not using the LLC and having them pay me on a 1099 basis directly? Its an option. I am the one that set up the LLC for protection.

It seems if I stick with the LLC, I am shifting risk to myself and would need to purchase my own insurance?


Operating partner - Wikipedia
 
An LLC doesn't protect you from your own acts of negligence. Probably doesn't matter how you get paid or to whom or what the paycheck is written to. If you act in the capacity of an officer or director you are likely to be sued as an individual anyway. Make sure you are covered by name on the D&O policy regardless of any other considerations.

Consult an attorney for "legal advice" on the matter.
 
Situation

Am an operating partner to a couple of companies all held by the same corporate group. Am paid on a 1099 basis (but have yet to receive compensation). Originally, I set up a Delaware LLC with office location in Washington State to protect myself. I am presented to the outside world as an officer and a director of the company. But I am not a salaried employee.

Now the company has expanded and other operating partners have asked for directors and officer insurance. The company will purchase such insurance.

Am I better off not using the LLC and having them pay me on a 1099 basis directly? Its an option. I am the one that set up the LLC for protection.

It seems if I stick with the LLC, I am shifting risk to myself and would need to purchase my own insurance?


Operating partner - Wikipedia

If you read the article you posted, you are not an independent contractor subject to a 1099. You are an employee of the company(s) in the capacity of an operating partner or a director.

You are misclassified.

Since 2019 states are going after any company they find misclassifying employees as IC's.
 
And many states have been doing so before 2019 especially in the construction industry. It seems to mainly get triggered when an employee files for unemployment and there have been no SUTA wage reports or tax payments because they were misclassified as "independent contractors"
 
Am an operating partner to a couple of companies all held by the same corporate group. Am paid on a 1099 basis (but have yet to receive compensation). Originally, I set up a Delaware LLC with office location in Washington State to protect myself.

Starting the first two sentences with "Am" is a little odd. It implies that the subject is "I" (as in "I am an operating partner"). However, your reference to setting up an LLC suggests that you are not, in fact an operating partner and that your LLC is an operating partner and that your LLC is to be paid on a 1099 basis. Is that correct?

Also, if you're in Washington, why did you organize the LLC in Delaware, and from what were you seeking to protect yourself?

I am presented to the outside world as an officer and a director of the company.

Of which company? Of your LLC? Of one of the two "couple of companies" for which "you" are "an operating partner"?

Now the company has expanded and other operating partners have asked for directors and officer insurance. The company will purchase such insurance.

Which company? Asked whom for insurance?

Am I better off not using the LLC and having them pay me on a 1099 basis directly?

Even putting aside the ambiguities in what you wrote, no one here could possibly answer this question intelligently.

I strongly suggest you seek advice from a local business attorney to avoid making any (further) mistakes.
 
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