4 ms·

I also own my company, zero is not a limit.

by chrisdevereux 12y ago

ChuckMcM 12y ago
Exactly, you can go waaaaay past zero :-)
- maerF0x0 12y ago
  no, zero is the bottom limit. Unless you do something stupid like personal guarantees on loans or do not incorporate. Thats the point of LLCs. Limit the liability of shareholders. Edit: I guess I should add, of course legal matters depend on location. AFAIK much of the developed world has legal structures that allow risk to be limited to the "company" and not risk the shareholders' personal assets (ie Your personal assets).
  - chrisdevereux 12y ago
    Most people would consider their own investment in their company to be 'negative salary'
  - palebluedot 12y ago
    no, zero is the bottom limit. Unless you do something stupid like personal guarantees on loans or do not incorporate. Thats the point of LLCs. Limit the liability of shareholders. I am an owner / co-owner of 3 (US-based) LLCs, and I can tell you from experience that banks will require a personal guarantee, joint and several, of all principal owners, for any non-collateralized loan or line of credit. The same is generally true of most lessors, as well. Some (most?) tech incubators / hubs / innovation centers are the exception, and I am sure also some smaller 'mom-and-pop' lessors. But once we moved out of those, we had lessors wanting us personally guaranteeing our 3-5 year leases, although we were able to negotiate those terms away with some of them. We were able to secure net-30 terms from suppliers, however, that did not require a personal guarantee. Even if you managed to somehow navigate these waters without anyone requiring a personal guarantee, zero is generally not the bottom limit. If you are a founder, or an owner, you most likely have brought assets and/or money into the venture.
    - beachstartup 12y ago
      great post. i'll add that it's not just term debt or capital leases, but other contracts too - even your first commercial real estate lease can require a large security deposit and personal guarantee. and if you're not careful, this personal guarantee will continue carrying over even as you expand into larger and larger offices... and of course let's not forget operational credit cards (you are exposing yourself if you don't use an amex to pay for certain things) - that's the owners'/founders' credit on the line (at least at first).
  - gambiting 12y ago
    >> Unless you do something stupid like personal guarantees on loans As a director of a limited company in the UK - it's virtually impossible to get a loan without a personal guarantee by the director, unless your company has as much money as you are trying to borrow - in which case getting a loan is slightly pointless.
  - hsitz 12y ago
    "Unless you do something stupid like personal guarantees on loans or do not incorporate." Entities lending money are not stupid. You can't just start a new business, incorporate, and then go out and have your corporation get a loan. Lenders are obviously aware that the corporation is not credit-worthy, will demand personal liability on the loan, same as they would if your business had no corporate form.
beachstartup 12y ago
yeah, it's more of a starting point. it can go really quickly in either direction.

I also own my company, zero is not a limit.

ChuckMcM 12y ago

Exactly, you can go waaaaay past zero :-)

maerF0x0 12y ago
no, zero is the bottom limit. Unless you do something stupid like personal guarantees on loans or do not incorporate. Thats the point of LLCs. Limit the liability of shareholders. Edit: I guess I should add, of course legal matters depend on location. AFAIK much of the developed world has legal structures that allow risk to be limited to the "company" and not risk the shareholders' personal assets (ie Your personal assets).
- chrisdevereux 12y ago
  Most people would consider their own investment in their company to be 'negative salary'
- palebluedot 12y ago
  no, zero is the bottom limit. Unless you do something stupid like personal guarantees on loans or do not incorporate. Thats the point of LLCs. Limit the liability of shareholders. I am an owner / co-owner of 3 (US-based) LLCs, and I can tell you from experience that banks will require a personal guarantee, joint and several, of all principal owners, for any non-collateralized loan or line of credit. The same is generally true of most lessors, as well. Some (most?) tech incubators / hubs / innovation centers are the exception, and I am sure also some smaller 'mom-and-pop' lessors. But once we moved out of those, we had lessors wanting us personally guaranteeing our 3-5 year leases, although we were able to negotiate those terms away with some of them. We were able to secure net-30 terms from suppliers, however, that did not require a personal guarantee. Even if you managed to somehow navigate these waters without anyone requiring a personal guarantee, zero is generally not the bottom limit. If you are a founder, or an owner, you most likely have brought assets and/or money into the venture.
  - beachstartup 12y ago
    great post. i'll add that it's not just term debt or capital leases, but other contracts too - even your first commercial real estate lease can require a large security deposit and personal guarantee. and if you're not careful, this personal guarantee will continue carrying over even as you expand into larger and larger offices... and of course let's not forget operational credit cards (you are exposing yourself if you don't use an amex to pay for certain things) - that's the owners'/founders' credit on the line (at least at first).
- gambiting 12y ago
  >> Unless you do something stupid like personal guarantees on loans As a director of a limited company in the UK - it's virtually impossible to get a loan without a personal guarantee by the director, unless your company has as much money as you are trying to borrow - in which case getting a loan is slightly pointless.
- hsitz 12y ago
  "Unless you do something stupid like personal guarantees on loans or do not incorporate." Entities lending money are not stupid. You can't just start a new business, incorporate, and then go out and have your corporation get a loan. Lenders are obviously aware that the corporation is not credit-worthy, will demand personal liability on the loan, same as they would if your business had no corporate form.

beachstartup 12y ago

yeah, it's more of a starting point. it can go really quickly in either direction.