Question about liability across multiple enterprises

**itsjustmoney** · 11-15-2009 07:50 PM

Lets say you own 2 businesses. Now assume business #1 is sued by someone. Can the plaintiff also sue business #2, just because you own it even if that business did nothing wrong?

**GuyC** · 11-16-2009 06:16 AM

Please note, I am not a lawyer and I cannot say for 100% that I am correct with what I am saying.

It depends.

If they are Corporations or LLC's then that is the whole idea - they provide liability protection. Now if YOU are being sued then any assets you have would be fair game, which include your businesses.

Example: If you own one business called ABC, Inc and other called XYZ, LLC - then if someone sues XYZ, LLC they cannot go after ABC, Inc unless they were somehow involved (or again you were being sued individually).

This is why legal experts stress keeping business dealings completely separate so as a company is not seen as a front for personal dealings.

**rdc** · 11-16-2009 07:51 AM

I think GuyC's answer is pretty spot on.

It's may depend on several things, including what legal structure is housing each business, and whether various formalities and conditions are met in regard to the operation of those structures.

For example, if the two businesses commingle assets or otherwise do anything that is viewable as falling short of completely separate, a court could in theory say they are illusory and are actually the same company. Also, if one company were a shareholder/owner of the other, that company's interest could become reachable.

**akula** · 11-17-2009 11:26 AM

angel, u're gonna get banned if you troll

**e-roc** · 11-17-2009 03:32 PM

i see a lot of entrepeneurs using their personal bank accounts for wayyyyy too many business things. GuyC is right on about even if you did your work in running multi LLCs, if you are merging the accounts, you are risking it.

if this is difficult, i encourage you to open up new account lines under the FEIN# of a new LLC. it will be much easier to maintain documented seperation between each business expense and income.

Another thing... the online banking services end up doing your bookkeeping for you... so reconciling is as easy as running online reports and downloading them into your financial software. no need to worry about wasting time figuring out what expense is what at 11:45p on April 14th. lol!