Re: Laid Off

Subject: Re: Laid Off
From: Lauren <lauren -at- writeco -dot- net>
To: techwr-l -at- lists -dot- techwr-l -dot- com
Date: Tue, 13 Nov 2012 13:35:09 -0800

On 11/13/2012 8:08 AM, Ken Poshedly wrote:

I'm sure to get my share of darts for this reply, but I was told many years ago
that "technically", one's personal assets (home, car, etc) are NOT at risk with
a corporation, but they are at risk with what is called a "Sole Proprietorship"
(which is really nothing more than a paying hobby and perhaps one step above
"freelancing").

A sole proprietorship is where the income of the company passes through the person, so that the company and the person are the same and there is no asset protection in the event the person or the company get sued but there is some protection against double taxation.

Thus the benefits of incorporating;

Incorporation, either as a company or an LLC (depending on state) can protect assets, so if the company gets sued, then the personal assets are generally not at risk and if the person gets sued, the company assets are usually protected.

I did as a Subchapter S corporation (instead of an LLC) on the advice of my CPA.

It is also good to talk to a lawyer to learn about legal liabilities that holding a corporation can present.

That will give you certain tax protection (avoid double taxation) between business and personal income, but it will generally not give you asset protection for assets held by the corporation since corporate assets can be attached to satisfy shareholder debt.

And yes, I know lawyers will go after any- and everything they can, but this is
what I was told is / was the legal way to protect one's personal assets from
lawsuits involving a corporation.

A very important note here is that personal income and assets *must* always be separate from corporate income and assets. If personal and corporate assets are co-mingled, for example, if a person pays a personal bill with the corporate checking account, then the corporate veil will be pierced and all protection is lost.


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Follow-Ups:

References:
Laid Off: From: Robin Davidson
RE: Laid Off: From: Cardimon, Craig
Re: Laid Off: From: Robin Davidson
RE: Laid Off: From: Kat Kuvinka
Re: Laid Off: From: Robin Davidson
Re: Laid Off: From: Peter Neilson
Re: Laid Off: From: Milan Davidović
Re: Laid Off: From: Lauren
RE: Laid Off: From: McLauchlan, Kevin
Re: Laid Off: From: Ken Poshedly

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