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Insure Heavily in High-Risk Specialty

June 17, 1997|KAREN E. KLEIN

Q: I began doing mechanical engineering consulting work about a year ago. I work with equipment such as roller coasters, show action machinery and industrial process machinery. I have been considering the options of incorporating, taking out errors and omissions insurance and forming a limited liability company. Do you have any advice?

--Paul Nicholas


A: Because you are working in a high-risk, high-profile industry, you are correct to be concerned about potential liability. If there were to be a disaster involving an amusement park ride that you designed or approved, the plaintiff's attorney would certainly name every single person involved in the design, construction and ownership of that ride as a defendant in a lawsuit. You would be fair game.

So I would certainly recommend that you limit your liability by purchasing insurance and forming some kind of corporation or limited liability company.

The type of insurance that you need would be a matter for you to discuss with your insurance provider, based on your income and your degree of risk. Similarly, you should consult with your financial advisor to find out whether you should incorporate or form a limited liability company.

The type of corporation or company that will be most attractive for you and most advantageous for your situation will depend wholly on your income and tax status.

--Eli Kantor

Business and employment attorney

Beverly Hills


Q: I would like to open a store that sells dresses, shoes and other accessories at discount prices because they are either department store returns, surpluses or manufacturer's irregulars. Where can I buy these items?

--Bess G. Valenzuela, Walnut


A: There are a couple of ways to purchase "seconds," which are items that are somehow flawed, and "manufacturers' overruns," which are the first-quality items that manufacturers have produced over and above their large orders of merchandise. Overruns are typically sold at outlet stores, discount retail stores, swap meets and off-price stores like the one you are contemplating.

The first way to buy this merchandise is to locate local manufacturers and negotiate with them directly. You can go to a large library and find the Index of Manufacturers, then look at the section under Nos. 2,300 to 2,399, which lists manufacturers in the apparel business.

If you want to locate overruns of clothing lines that are not produced locally, you should seek out "wholesale jobbers"--merchants who have contracts with particular clothing lines to purchase all their overruns and seconds and then sell them at discounted prices.

You can find many of the jobbers in Southern California by wandering through the apparel shops downtown between 7th Street and Olympic Boulevard and Los Angeles Street and Central Avenue.

--Jean Gipe


Apparel Technology and Research Center

Cal Poly Pomona


Q: I would like to start a home-based business that combines medical transcription and a medical billing service. Where can I get training in medical billing and coding procedures?

--James E. Slaughter, Culver City


A: Filing and managing electronic billing claims for medical offices is an extremely complicated and detail-oriented field. There is a viable market out there, but it is imperative that you get the proper training to enable you to get involved in it. There are software packages available at costs up to $10,000, but we do not recommend that you purchase software until you take a course on the procedures.

Our association, founded in 1991, puts on 2 1/2-day seminars across the country that introduce people to the field and teach them how to operate a billing service. You can meet others already in business and get individual recommendations on software, marketing and other issues. We have a seminar coming up in San Diego in July. You can call (800) 660-0665 to get more information on it.

--Norma Border

National director

National Assn. of Claims Assistance Professionals

Downers Grove, Ill.


A: We run a correspondence school that has been in business since 1981, and we offer four courses that teach home-based businesses. One of them is on medical claims and billing. Coding is covered somewhat, but it is really a different field and requires specialized training. Our courses cost $1,700 and last from five months to two years depending on how fast the student wants to work.

We offer free, one-hour seminars all over the country that introduce prospective students to our courses. You can call (800) 359-3455 to get information about upcoming seminars or to enroll in a course.

--Vickie Worthen

Enrollment services

At Home Professions

Fort Collins, Colo.

If you have a question about how to start or operate a small business, please mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia CA 91016, or e-mail it to Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.

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