legalities
2007-01-25 07:33:57 · 7 answers · asked by Anonymous in Business & Finance ➔ Small Business
That's why you don't just start a business, you start an LLC business. That way you are a "limited liability company", meaning you can only cover part of the liability. This only works if you are reselling something instead of producing it.
2007-01-25 07:41:51 · answer #1 · answered by anon 5 · 1⤊ 0⤋
I'm not sure I understand the question. Is the amount the business is being sued for small, or is the business small? I assume the business is small, since a small amount could just be paid.
There are a lot of different factors at play here, and the exact details will depend on your specific state. With that said, this is not intended as legal advice, and is for informational purposes only.
Assuming your business is ultimately found liable for whatever it is being sued for (or otherwise settles), the end results will vary Depending on how your company is organized. If the company is a sole proprietorship, then the owner will ultimately be liable. If the business is a partnership, the partners will be liable.
If organized as a corporation or an limited liability company (LLC), then the company is liable up to it's value, but the individual shareholders are not liable beyond the value of their shares.
Even with corporations and LLCs, there are several ways shareholders can be held liable. For example, if the owner(s) signed any sort of agreement that would make themselves personally liable (rather than the corporation), they can be held liable, but should be named in the suit as a defendant. Also, a plaintiff may be able to "pierce the corporate veil" and hold the owner responsible if it can be shown that the corporate form was more or less on paper only (for example, the shareholder doesn't hold the required meetings and uses the business accounts for his or her personal checking).
If you are covered by any sort of insurance that might potentially cover the type of claim that the lawsuit arises from, it would be good to contact them at your earliest opportunity. Likewise, consider contacting a lawyer, at least for a brief consultation.
Good luck!
2007-01-25 15:51:21 · answer #2 · answered by Eric 3 · 0⤊ 0⤋
It depends - if it is a limited company then it would end up in administration if its liabilities exceeded its assets and there was no way to trade it out so to speak.
This means that first line creditors may recieve a small amount back compared to what they are owed or nothing at all if the company is plain flat bust.
Sometimes a voluntary arrangement is made where x recieves y for an amount of time, but where there are no assets or future income that too can be pretty insecure.
2007-01-25 15:48:52 · answer #3 · answered by Wantstohelpu 3 · 0⤊ 0⤋
If the court offers a judgement to an individual there will be some discussion between you and the Judge as to how soon that judgement can be paid off.
They are not entitled to all of the money instantly, you may be able to make payments to them over the course of several years.
2007-01-25 15:43:50 · answer #4 · answered by unitedwestand7s 3 · 0⤊ 0⤋
Your insurance company does that for you. IF you have public liability insurance. I have, to the tune of £2,000,000!
If you haven't, then I'm afraid your house and goods are long gone!
2007-01-25 15:46:57 · answer #5 · answered by Moorglademover 6 · 0⤊ 0⤋
The trick is to never do business for New Yorkers if at all possible.
2007-01-25 15:42:15 · answer #6 · answered by crawler 4 · 1⤊ 1⤋
that's what you have business liability insurance for.
2007-01-25 15:44:27 · answer #7 · answered by lola 5 · 0⤊ 0⤋