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Run your cloud contracts (or anything possible to incur liability) through a separate LLC so if there are billing issues you can just move on. The structure sh

Run your cloud contracts (or anything possible to incur liability) through a separate LLC so if there are billing issues you can just move on. The structure should look like: "My App LLC" has contract with "My Host LLC" for hosting services. "My Host LLC" provides those services via a cloud provider. If "My Host LLC" racks up a 2 million dollar bill with the cloud provider and goes out of business then I just move to "New Host LLC" and carry on. It's not as if the patients of a Doctor who fails to pay his office rent would become liable. This is the entire purpose of LLCs.

fargle 2y ago
ah, yes. the "Shady Roofing Contractor" business model. "don't worry, all the work has warranted by New Quality Roofing Services IV, LLC" although, there's very little about that structure that's unique to an LLC. it can be done the same with a corporation. i'm certain this only works when the amount of debt being ripped off (ahem in dispute) is not a lot more than the cost to sic a really good law firm on you.
feoren 2y ago
I'm not a lawyer but this sure sounds illegal. Piercing the veil?
standeven 2y ago
LLC liability protections are not absolute. I wouldn’t be surprised if this would fall under gross negligence or callous indifference or some other legal umbrella that voids the liability protection. I also wouldn’t be surprised if there’s some fine print in the account agreement that creates a personal guarantee.
- tessierashpool9 2y ago
  > callous indifference i like this one. the ultimate law to subjugate everybody once and for all!
jahewson 2y ago
That’s not going to fly. Firstly, because cloud contracts generally prohibit renting out the cloud services as-is - you can build a product on top of it but not act as a reseller of their platform. Secondly, and perhaps most importantly because setting up separate LLCs with the goal of avoiding lawful debts is the demonstrates fraudulent intent and will get your LLCs veil-pierced.
- cozzyd 2y ago
  What you mean I can't set up an LLC for every large expense I want to avoid paying?
  - reverendsteveii 2y ago
    You could, but anything you buy as that LLC would actually belong to the LLC and be subject to seizure and sale when the LLC doesn't pay its bills. That's my thousand-foot understanding of it, at least. If what you said worked people would do it all the time.
  - disqard 2y ago
    You're doing it wrong. You need to be a billionaire, and then you need to threaten to sue anyone who dares to ask you to pay.
- hdjjhhvvhga 2y ago
  > cloud contracts generally prohibit renting out the cloud services as-is Doesn't have to be as-is - a simple infra on top of it will do > setting up separate LLCs with the goal of avoiding lawful debts If normal bills are paid as usual and only this kind of crap is not paid, Amazon would have a hard time proving in court that the whole point of the daughter LLC was to avoid paying bills.
gklitz 2y ago
> This is the entire purpose of LLCs. It’s not. A lot of weight should be put on the concept of “legitimate business”. Let’s say you decide to open up a car dealership and you use an LLC to buy cars then transfer them to another LLC and sell them. Then declare bankruptcy on the one containing the bills. You won’t be shielded, and you’ll likely go to jail for fraud. The construction is to allow a business to go bankrupt with limited liability not to allow the expense account of a business to go bankrupt.
- amyames 2y ago
  It doesn’t work that way. When a dealer has a floor plan (to finance their inventory), the cars that are being bought by the dealer are collateral and have liens on them. The lien has to be satisfied (bank paid with interest) to transfer the title to a buyer or to your theoretical “another LLC.” Just like my car would have to be, for me to get a clear title to sign over to you. Not everyone uses a floor plan, an unsecured line of credit would be the one situation where what you’re proposing would “work” Floor plans are one of the reasons there’s only a few (used) dealerships in town I could walk into, plunk down cash, and walk out with a signed title that day. Because they’re transferring the title to themselves, and then to me, using the chain of ownership boxes on the back,and then sending that to dmv. I didn’t know a lot about this other than the owner at my previous company had attempted to branch into car sales before he passed away. TLDR, we couldn’t even sell or dispose of the cars with good intentions and they all got repossessed.
weare138 2y ago
Incorporating is good business advice in general and something you definitely should do but bankruptcy isn't always an option and those debts don't magically disappear. Unless you're planning on running an illegal or quasi-legal business from the start, avoid high risk strategies like this.
HomeDeLaPot 2y ago
I'm not driving, officer, I'm traveling!

fargle 2y ago

ah, yes. the "Shady Roofing Contractor" business model. "don't worry, all the work has warranted by New Quality Roofing Services IV, LLC" although, there's very little about that structure that's unique to an LLC. it can be done the same with a corporation. i'm certain this only works when the amount of debt being ripped off (ahem in dispute) is not a lot more than the cost to sic a really good law firm on you.

feoren 2y ago

I'm not a lawyer but this sure sounds illegal. Piercing the veil?

standeven 2y ago

LLC liability protections are not absolute. I wouldn’t be surprised if this would fall under gross negligence or callous indifference or some other legal umbrella that voids the liability protection. I also wouldn’t be surprised if there’s some fine print in the account agreement that creates a personal guarantee.

tessierashpool9 2y ago
> callous indifference i like this one. the ultimate law to subjugate everybody once and for all!

jahewson 2y ago

That’s not going to fly. Firstly, because cloud contracts generally prohibit renting out the cloud services as-is - you can build a product on top of it but not act as a reseller of their platform. Secondly, and perhaps most importantly because setting up separate LLCs with the goal of avoiding lawful debts is the demonstrates fraudulent intent and will get your LLCs veil-pierced.

cozzyd 2y ago
What you mean I can't set up an LLC for every large expense I want to avoid paying?
- reverendsteveii 2y ago
  You could, but anything you buy as that LLC would actually belong to the LLC and be subject to seizure and sale when the LLC doesn't pay its bills. That's my thousand-foot understanding of it, at least. If what you said worked people would do it all the time.
- disqard 2y ago
  You're doing it wrong. You need to be a billionaire, and then you need to threaten to sue anyone who dares to ask you to pay.
hdjjhhvvhga 2y ago
> cloud contracts generally prohibit renting out the cloud services as-is Doesn't have to be as-is - a simple infra on top of it will do > setting up separate LLCs with the goal of avoiding lawful debts If normal bills are paid as usual and only this kind of crap is not paid, Amazon would have a hard time proving in court that the whole point of the daughter LLC was to avoid paying bills.

gklitz 2y ago

> This is the entire purpose of LLCs. It’s not. A lot of weight should be put on the concept of “legitimate business”. Let’s say you decide to open up a car dealership and you use an LLC to buy cars then transfer them to another LLC and sell them. Then declare bankruptcy on the one containing the bills. You won’t be shielded, and you’ll likely go to jail for fraud. The construction is to allow a business to go bankrupt with limited liability not to allow the expense account of a business to go bankrupt.

amyames 2y ago
It doesn’t work that way. When a dealer has a floor plan (to finance their inventory), the cars that are being bought by the dealer are collateral and have liens on them. The lien has to be satisfied (bank paid with interest) to transfer the title to a buyer or to your theoretical “another LLC.” Just like my car would have to be, for me to get a clear title to sign over to you. Not everyone uses a floor plan, an unsecured line of credit would be the one situation where what you’re proposing would “work” Floor plans are one of the reasons there’s only a few (used) dealerships in town I could walk into, plunk down cash, and walk out with a signed title that day. Because they’re transferring the title to themselves, and then to me, using the chain of ownership boxes on the back,and then sending that to dmv. I didn’t know a lot about this other than the owner at my previous company had attempted to branch into car sales before he passed away. TLDR, we couldn’t even sell or dispose of the cars with good intentions and they all got repossessed.

weare138 2y ago

Incorporating is good business advice in general and something you definitely should do but bankruptcy isn't always an option and those debts don't magically disappear. Unless you're planning on running an illegal or quasi-legal business from the start, avoid high risk strategies like this.

HomeDeLaPot 2y ago

I'm not driving, officer, I'm traveling!