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would it affect the shareholders and/or partners on a personal basis?

2007-06-30 23:07:39 · 4 answers · asked by Jonathan_D 2 in Business & Finance Corporations

Actually, i'm afraid it will affect my credit.

2007-06-30 23:31:51 · update #1

4 answers

A corporation is a seperate entity apart from its shareholders.

Furthermore, when bankruptcy is declared, liability for existing debts does not reach out to shareholders as in a general partnership or sole propietorship; it stays strictly within the corporation name itself.

Im assuming you are worried about debtors and creditors coming to you(the shareholder) for deliquent debts. The answer is no, you are totally safe.

2007-06-30 23:29:50 · answer #1 · answered by mrxslim 3 · 0 0

the whole idea of incorporation is to protect the personal assets of the shareholders/partners from the risks associated of owning/running a company. The shareholders/partner can only loose there original investments (the subscribed capital).

However some things to consider:
- if there is only one shareholder/partner and the corporate assets are mixed with private assets (personal expenses paid from the bank account of the company, etc) this shield can be challenged.
- if taxes are not paid, IRS may keep the management personal liable, same goes for mismanagement.
- banks might require that the shareholders give personal guarantees before they grant a loan to the company.

Your personal credit rating might be negatively impacted.

2007-07-01 06:45:11 · answer #2 · answered by europeaninla 4 · 0 0

investors should never invest so much that is affects their personal life. So, no, it does not effect them on a personal basis unless they lied to them selves.

2007-07-01 06:11:34 · answer #3 · answered by duwbryd 3 · 0 0

Well, the stock price will fall and that will affect your wealth. But, it won't affect your credit.

2007-07-01 13:13:14 · answer #4 · answered by jdkilp 7 · 0 0

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