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In most US states you need a business license. People incorporate for a reason, though. If you don't your personal assets aren't protected if the business get

by tsotha 11y ago

In most US states you need a business license. People incorporate for a reason, though. If you don't your personal assets aren't protected if the business gets sued or becomes insolvent. There's a reason Donald Trump still has lots of money after having his businesses go bankrupt four times.

adebtlawyer 11y ago
A corporation isn't a magic shield. The limited liability exists mostly to allow investors to own stock in large enterprises without being exposed to more liability than the value of their shares. Trump is/was doing multimillion dollar real estate development with outside investor's money, and observing lots of corporate formalities. That's why his businesses could go bankrupt without wiping him out. If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. Besides, most creditors that loan to small businesses demand personal guarantees from the owners. Just having a corporation won't make you Donald Trump. But it might earn your tax preparer some fees.
- tsotha 11y ago
  >If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. You can sue anybody you want. The question is always whether or not you can prevail. If you're just a creditor you would almost certainly be unable to get a judgement against the individual unless he did something stupid like spend corporate money on personal items.
  - adebtlawyer 11y ago
    Doing stupid things is common in the small business world. For example, I regularly run across people who have no personal bank account and just use the company account for everything. In practice, there is almost always something about how things are run (particularly with a failing company) that is actionably questionable and pulls the owner personally into the suit.

by tsotha 11y ago

adebtlawyer 11y ago

A corporation isn't a magic shield. The limited liability exists mostly to allow investors to own stock in large enterprises without being exposed to more liability than the value of their shares. Trump is/was doing multimillion dollar real estate development with outside investor's money, and observing lots of corporate formalities. That's why his businesses could go bankrupt without wiping him out. If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. Besides, most creditors that loan to small businesses demand personal guarantees from the owners. Just having a corporation won't make you Donald Trump. But it might earn your tax preparer some fees.

tsotha 11y ago
>If I represent a creditor, I'm not going to care if your chickenshit small business is incorporated or not, particularly if it's just a professional services business like a consultant. I'll just sue you AND your corporation. You can sue anybody you want. The question is always whether or not you can prevail. If you're just a creditor you would almost certainly be unable to get a judgement against the individual unless he did something stupid like spend corporate money on personal items.
- adebtlawyer 11y ago
  Doing stupid things is common in the small business world. For example, I regularly run across people who have no personal bank account and just use the company account for everything. In practice, there is almost always something about how things are run (particularly with a failing company) that is actionably questionable and pulls the owner personally into the suit.