Protection from litigation on work done for a friend

Question

I am a resident of the state of Pennsylvania in the United States, and I occasionally do website design and hosting support for small businesses in my area. I generally don't do this for money, it is more because I enjoy doing it and helping out friends and acquaintances I know through local small business organizations and meetups, and I hate to see these scammy SEO optimization companies charging what I feel are exorbitant fees so I have offered to help a number of small businesses with their website and email hosting for what I feel is fair and not exploitative. Generally I prefer barter-in-kind for my services (Eg. Free or discounted remodeling, lawn service, tax services, etc...) and my accountant makes sure I am square with the IRS.

I am working on a website for a customer that has a number of products that he wishes to sell on his website, and as I usually do websites through customized Wordpress templates, I have the option to install a commerce plugin that will handle the payment processing side of things. I am fully qualified and comfortable to do this work, however I have only historically ever done integration with payment processors in the role of an employee for another organization, and as such I never had to worry much about the potential damage from cyber crime.

My concern is that if I set this up for this client, and (knock on wood) the client or his customers became negatively impacted by a security exploit in the plugin or payment processor, then I would be potentially drawn into litigation.

As I do not have an LLC and this is more of a hobby job for me, I could stand to fall into personal bankruptcy in the worst case scenario no? Further I looked into cyber crime insurance a few years back for an unrelated matter and the quote I had seen given to a different client was far beyond the realm of affordability for either myself or my clients.

What steps short of establishing an LLC can I take to protect myself here? Is there any kind of legal document or agreement that I could sign with my client that would absolve me of any legal responsibility for the use of the websites online store such that I am at least somewhat protected?

If not then I am thinking I will not be comfortable doing an online store for this client.

Answer 1

First of all, the use of an LLC to do such work would not protect you from liability for negligence or intentional misconduct.

To do such work in reasonable security, you would need to inform your employer, in writing, making it plain that for the security of the e-commerce transactions, you would be depending on the security of the third-party tech. You would also make the extent of your experience in using such technology clear. Sources on the security of the plugin could also be referenced.

It might well be wise to have an actual written contract, that spells out what you would, and would not, be responsible;e for, in dong this website. In particular such a contract could make it clear that you will be relying on third-party software (which would be named) for the security of the "store" part of the site, and that you could not be responsible for the security of that plugin.

There are various reliable published and online sources for drafts for website development contracts. There should be no need to create one from scratch. Indeed it is better not to try to write such an agreement from nothing. But you could (and might be wise to) have a lawyer review the final draft of any such agreement. That should not be overly expensive.

Such a contract woulds offer much better protection than the use of an LLC. If you have an LLC it could be used as well, but the protection that gives is from debt liability, not from liability for professional negligence. It also helps one document business income and expanses if used consistantly, and can be helpful for tax purposes.