When you want to start a business, you have the right to simply begin operations without formally registering a business entity with the State of California. If you start operations alone, you will have a sole proprietorship, and a business started with multiple owners will be a basic partnership. While maintaining this type of simplified business structure may seem attractive for several reasons, it is important to realize that it opens you up to substantial personal liability if something goes wrong. You should discuss your options to limit liability with a business lawyer in Pleasanton.
A sole proprietorship or partnership is not considered to be a distinct legal entity from its owners. Therefore, there is no line between business and personal debts or liabilities. Parties can seek to satisfy debts or judgments by going after your personal assets and property if business assets are insufficient. In order to limit the personal liability you may face, you should consider forming a business entity such as a limited liability company (LLC) or a corporation.
Both of these business entities separate the company from the owners, making it difficult (though not impossible) for creditors to go after personal assets. You must ensure that you properly maintain the business entity, as well as keep the company’s funds and finances separate from your personal finances. If you fail to do so, you risk a court allowing a creditor to “pierce the corporate veil” and go after your personal property. It is not enough to simply form an LLC or corporation, but you should discuss how to maintain liability limitations with an experienced Pleasanton business attorney.
Contact Our Business Lawyers in Pleasanton for More Information
The law firm of Randick O’Dea & Tooliatos helps all types of business owners with a wide range of legal matters, including entity formation and maintenance. Call 925.460.3700 or contact us online today.