It happens over a long period of time..no so much with a speed dial. Here's a real scenario:
Guy buys knife...somehow the tip breaks off and pokes himself in the eye. Eye gets infected and after a month without medical attention, he permantly loses his vision. A year later he loses his job because of performance issues due to his failed eyesite. Medical bills and no job puts his marriage on the rocks due from the financial stress. 3 years later, he hits rock bottom ....divorced with bill collectors pounding down his door 24/7. Out of desperation, he phones a 1-800 law firm from a late night TV commercial about getting out of debt, stopping bill collectors and personal injury. At this point, his life is in the dumps and he is easly convinced that it all because your knife blade broke. A month later, you get a certified mail from an ambulance-chasing law firm. From there, they try to get anything they can out of you, just fishing at first... They'll shoot for $2 million. If you have insurance, the suit will be very agressive...but you'll have a defense team. Without insurance, you're a wounded gazelle and the Sarengetti. If you set up a LLC...you'll have to prove to the courts that you really are a LLC in practice...so keep your documents, taxes, and detailed meeting minutes. The Court will determine if there is a legal business structure with Limited Liablity...or if you are just a Joe Schmoe who filed some papers with the State.
It will be a nightmare regardless of what you do!!
It's a bleak situation.....one that causes all of us to lose sleep over.
I don't think there is a good answer.