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06-18-2007, 11:46 AM
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#1 (permalink)
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Senior Member
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are you held liable if sued?
If I am a C corporation of S corporation, and a client sues me, what am i held liable for?
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06-18-2007, 12:41 PM
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#2 (permalink)
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YE Veteran
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When you say a client sues you, do you mean you are listed on the lawsuit or the company is?
Under a corporation, if they sue the company, your personal assets are generally protected. I use the word generally because each state has their own laws regarding what is protected and in what circumstances they wouldn't be (ie. if you personally acted illegally).
If you were sued as an individual, then they could go after all your personal assets. If you were sued as an individual for something the company did or you did acting as a representative of the company, you should file a motion to have the case dismissed against you.
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06-18-2007, 12:59 PM
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#3 (permalink)
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YE Veteran
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the whole key to not having the corporate vale pierced, is to keep the finances completely separate. Different bank accounts, if you buy something for the business make sure the business pays you back and its documented, make sure any money that is taken out for you personally is properly documented, make sure any money you put into the business is properly documented; etc.
As long as the court cannot not link personal assets and company assets, then you should be good.
______________________________
Robert Falk
Business Developer / Investor
Self Help & Success Forum
Last edited by radreality; 11-14-2007 at 06:55 PM.
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06-18-2007, 01:42 PM
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#5 (permalink)
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Senior Member
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I really appreciate your response guys, here is my situation, I started an advertising magazine, it cost us about $8000 to run on a monthly base. we obtain several clients, we launch the first month on the second month we fell behind iin red. The whole finance was manage completely wrong. Now we dont have the money and we owe several clients. I fully want to take responsablilty for paying them back, but my partner is saying that we dont have money to pay back. I am telling him let face each client and tell them the truth and to give us time, my partner doesn't agree.... I feel that is not fair. so my concern is that i own a house, we are a S corporation, if the clients decide to take the business to court or us to court, what are my risk? now i dont think is fair that i face the whole situatuion. any advise will be greatly appreciated.
thanks in advance.
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06-18-2007, 01:48 PM
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#6 (permalink)
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YE Veteran
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yeah thats a tough situation. Its hard to say what they can and can't do without looking at the financial records.
You are right though. You should contact your clients before they contact you, and be upfront about the situation. Most will be willing to work with you. But you can't expect clients to work with you if they can't trust you to be honest with them.
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Robert Falk
Business Developer / Investor
Self Help & Success Forum
Last edited by radreality; 11-14-2007 at 06:55 PM.
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06-18-2007, 02:51 PM
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#7 (permalink)
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YE Veteran
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I agree with Rad, you have to be upfront with the clients and let them know the situation. Plan for the worst but hope for the best.
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06-18-2007, 06:51 PM
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#8 (permalink)
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Senior Member
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Quote:
Originally Posted by pbradish
I agree with Rad, you have to be upfront with the clients and let them know the situation. Plan for the worst but hope for the best.
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Honesty can get you along way. |
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06-18-2007, 11:42 PM
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#9 (permalink)
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YE Veteran
Location: Sydney, Australia
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Quote:
Originally Posted by jrod31
I really appreciate your response guys, here is my situation, I started an advertising magazine, it cost us about $8000 to run on a monthly base. we obtain several clients, we launch the first month on the second month we fell behind iin red. The whole finance was manage completely wrong. Now we dont have the money and we owe several clients. I fully want to take responsablilty for paying them back, but my partner is saying that we dont have money to pay back. I am telling him let face each client and tell them the truth and to give us time, my partner doesn't agree.... I feel that is not fair. so my concern is that i own a house, we are a S corporation, if the clients decide to take the business to court or us to court, what are my risk? now i dont think is fair that i face the whole situatuion. any advise will be greatly appreciated.
thanks in advance.
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In the short run..I think your parter is right..tell the creditors that you're out of business, that they've lost everything, move on and wait for them to make a move...which they probably won't.
Last edited by akula; 06-19-2007 at 12:02 AM.
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06-19-2007, 12:12 AM
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#10 (permalink)
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YE Veteran
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Quote:
Originally Posted by akula
In the short run..I think your parter is right..tell the creditors that you're out of business, that they've lost everything, move on and wait for them to make a move...which they probably won't.
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WHAT!?!?! thats the pussy way to do it (or australian way I guess). Man up, take responsibility. Your creditors will just hire collection agencies and at that point they don't care what they take. They will take anything they want, then you will be forced to go to court to get it back if they wrongfully took it (such as personal assets).
Plus, most creditors make you sign personal guarantees. So even if your company does go out of business, you have to pay them personally. Do you do that with them?
______________________________
Robert Falk
Business Developer / Investor
Self Help & Success Forum
Last edited by radreality; 11-14-2007 at 06:55 PM.
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