Your example details criminal activity which almost always pierces the veil between company and individual, the type of entity is irrelevant. It's certain that were he a sole owner corporation, the same would've happened. If your intent is to break the law with your enterprise you shouldn't bother organizing, because it's irrelevant.
Also, it's likely that to guarantee a loan the sole owner of a corporation would have to guarantee personal assets when signing for the loan. Because the parties are so closely related (owner and corporation) it is unlikely a bank would settle for less. In the case of an LLC, when an/the owner is asked to personally sign, it's the act of personally signing for the loan that defines what entity is actually responsible in the event of a default. Your example isn't sufficiently demonstrative of the reasons not to organize under a different entity type. I will say, as a comment on this conversation that LLC's are relatively untested. There's not a large body of case law built and what information is out there is largely legal opinion. Until that opinion has been tested in court, you're in a grey area. The idea behind organizing behind any entity type is to limit some (not all!) of your personal liability. Decisions about how to organize your business should be discussed with your accountant and/or your attorney. On Mon, Feb 23, 2009 at 10:20 AM, Webster <[email protected]> wrote: > *From:* David Lum [mailto:[email protected]] > *Subject:* RE: Incorporate, LLC, or ??? > > > > You sure about the lawsuit thing? > > > > Absolutely. > > > > Additionally, an LLC separates business assets from personal assets – if > your LLC goes bankrupt, the creditors can't get anything you've never used > as part of your business. > > > > Show me one financial institution that will loan a single member LLC money > without the member being asked to sign personally to guarantee the loan. > > > > Has anyone here been sued over IT stuff? > > > > Yes. I had a friend who was a single member LLC. He was doing very > high-end graphics and video production for a well known cable channel (that > I am sure Shook would watch during hunting season). He was caught using > their very high-end printers to print stuff the Secret Service found and > traced. The Secret Service got him and the customer sued him personally > even though he was doing work as his LLC. He lost his house, car, computer > equipment (to the Secret Service) and 5 years of his life. Being an LLC did > nothing to protect him. > > > > Moral of the story: don't print green stuff from copy machines, laser > printers or high-end ink-jets. All that equipment is traceable thru dots > printed on every page. > > > > > > Webster > > > > > > > > ~ Finally, powerful endpoint security that ISN'T a resource hog! ~ ~ <http://www.sunbeltsoftware.com/Business/VIPRE-Enterprise/> ~
