What sort of liability is insured with an S.M.L.L.C.?

[Wyrd Wind]

Just need clarifications.

I intend to hire employees.
Though, all of the company's funding will be provided by me.
The company is basically an e-commerce website utilizing drop shipping, so, with that said, there is no risk of on-the-job injury.
Employees work from their homes.

So, at a glance, is forming an S.M.L.L.C. really necessary, or should I just go down the Sole Proprietorship path, based on these specifications?

[paul2145r]

For the situation that you described, have you considered having your employees be independent contractors? Less tax hassle for you, and almost no liability (in terms of workers).

[GlobalWealth]

I would almost never recommend a sole proprietorship. Maybe if you are 12 and doing a lemonade stand. An SMLLC is a good option. As paul2145r said, you may also want to consider having your workers classified as independent contractors. That simplifies your life and you only need to provide a 1099 at the end of the year. There are certain criteria you need to adhere to in order to have workers classified as IC's though. The main consideration is "control" of the worker. It is imperative that you don't run afoul of those laws or you could be in serious trouble.

[e-roc]

You are talking of forming an entity as if entities come with automatic insurance policies. Thats definately not the case. It appears you are referring to a workmans comp coverage. for details on that, consult your states website. (stages regulate W.C. coverages). But having a background in insurance, i am an advocate for Business Owners liability coverage. You still run the risk of many things: including data security breaches by both employees and rogue hackers. You may also run into trademark infringement issues with your website. Basically though, BOP's(business owner liability policies) are a good investment. and seeing as how it is all drop shipping, you dont have a lot of inventory to insure, so the liability coverage alone will run very affordable.