| |
Liability Protection
What is Limited Liability Protection and How Does It Work? The law allows you to conduct business just yourself as a sole proprietor or with someone else as a partnership. If you operate the business yourself or as a partner, then for legal purposes, your identity is the same as the business. If your business is sued, both the business assets and your personal assets are at risk of being taken by a creditor to satisfy or pay for the judgment.
The law also allows you to operate a business in one of several different forms or entities such as a corporation or limited liability company (LLC), etc. If the business is operated as a separate legal entity, then the business is considered separate and apart from its owners. Therefore, if the business is sued, only the business assets can be taken to satisfy or pay a judgment. Your personal assets are protected. This is called limited liability protection. This protection is very valuable and a good reason to do business as an entity. However the protection is not absolute or 100% guaranteed.
When a lawyer sues a business entity , he or she will usually sue both the entity and the owners individually. This is because they know the entity often does not have sufficient assets to satisfy or pay the claim. However, the law requires the person suing to prove that the entity, the corporation or LLC, was not properly organized and operated as a separate legal entity. The legal terminology is called “piercing the veil.” If the court allows “piercing the veil” then a judgment can be obtained against the entity and the individual owners. However, if the court determines that the party suing has not proved their case, then the limited liability protection applies. The person suing might still be entitled to a judgment against the entity but not against the individual owners.
The key is to organize and operate your entity , corporation or LLC, properly so that you have a strong argument, if you are ever sued, that you are entitled to the limited liability protection. Organizing and operating the entity properly is not difficult, but there are certain steps or procedures that need to be taken to help insure your protection. Give us a call toll free (1- 888- 527- 6207) and we’ll be glad to discuss this with you. Or you can email us at: inc@rmci.net
Attorney Robert Montgomery has been counseling and incorporating businesses for more than 20 years. During that time, he's helped set up more than a 1000 corporations and limited liability companies (LLC's). He's a former business owner himself and has been corporate legal counsel for numerous small business corporations. He's presented lectures and seminars on the benefits and procedures involved with incorporating or forming LLC's and how to operate them for maximum benefit. He is a respected member of the legal community and is licensed to practice law in three states. References will gladly be provided upon request. You can call him at 1-888-527-6207. |
|
