QUESTION
What is my liability as a partner of a LLC or S-Corp?
Asked on Jun 13th, 2016 on Business Law - New York
More details to this question:
I am considering opening a LLC or S-Corp with a partner. Ownership would be 50/50 regardless of the entity. I have a concern with liability - both regarding the company and me personally. My partner recently went through a custody battle, is now paying child support, and has previously been in jail (non violent crime). I fear that if my partner personally encounters a conflict in either case, it can effect me and/or the business. Can it lead to the business being dissolved? Is it only my partners percentage of ownership that can be effected? How else could I be impacted? Also, do you recommend a LLC or S-Corp?
1 ANSWER
1 Award
Your personal liability is not different in a corporation or an LLC. S or C corporation is a tax election with no bearing on these issues. Your liability will be governed by your agreement with your partner. Banks might require personal guaranties, but your personal liability would come from the guaranty, and not the corporation or LLC structure.
Answered on Jun 25th, 2016 at 3:52 PM