You
Are Here: Home
> Resource
Articles > Working
Relationships > Article
|
Untitled Document
Top
Picks for
Sunday, 27 May 2012
|
Internet
Partnerships—Don't Throw Away Your Business
by
Richard Chapo, Esq.
General partnerships are a poor business entity choice when
it comes to pursuing business activities. They fail to provide
the asset protection shield that should always be put between
your business activities and personal assets. Many small businesses,
however, find it profitable to combine their product or services
with other small businesses. In doing so, they often fail to
realize that they are subjecting them to the same exposure as
a general partnership.
Why Even Worry About It?
You put a lot of time, money and sweat into your business.
After years of effort, you have it fine-tuned and are making
a nice living. How willing are you to lose your business?
Consider the following hypothetical situation involving two
sole proprietors. Our first party, Programmer, creates computer
programs for managing websites. The second party is Mark, the
owner of a site that provides small businesses with websites.
Programmer and Mark come to the conclusion that they can make
big money by opening a joint site. This type of situation occurs
every day on the Internet. How should they do it?
The best option is to form a corporation or LLC. Each party
will own an agreed upon percentage of the company. Mark will
contribute his marketing ability while Programmer contributes
software platforms. The bylaws (administrative rules) of the
corporation will detail how profits are divided as well as detailing
who gets what (domain name, client list...) if the relationship
doesn’t work out. If a corporation or LLC is not formed,
each party exposes their individual businesses to liability
just as would occur in a general partnership.
What has been accomplished? Mark and Programmer are protected
from liability arising from the new business. If the company
fails or is sued because of problems with the software, Mark
and Programmer will avoid personal liability and their original
businesses are not touched. Are they completely protected? NO!
Mark and Programmer are still open to liability on the "back
end". Without realizing it, each trusts the other to properly
run their independent businesses. Why is this?
Assume that Mark and Programmer follow the above plan and the
business is very profitable. One day, Programmer is served with
a lawsuit claiming that he violated copyright laws with a program
that he developed before meeting Mark. The nine companies to
which he sold the program also sue him. The trial goes badly
and Programmer is found liable to the tune of $750,000.
Guess what happens next? Since he is a sole proprietor, Programmer's
interest in the joint business with Mark is seized to satisfy
the judgment. Alternatively, he files personal bankruptcy. Either
way, Mark is involuntarily going to have a new business partner
that probably can’t program! In short, we are talking
about a disaster.
How To Protect Yourself
Business entities are the key to limiting your exposure to
liability. In the above situation, Mark and Programmer should
own the joint company as individuals, but they should form business
entities for their personal businesses. If the personal businesses
are sued, their individual ownership of the joint venture entity
is shielded from attachment.
As a general rule, you should form an individual business entity
for each business you own. By doing so, you are better able
to limit the potential damage of a lawsuit involving one of
the businesses.
Richard Chapo, Esq., is with http://www.sandiegobusinesslawfirm.com
offering business law advice to California businesses. This
article is for general education purposes and does not address
every facet of the subject matter. Nothing in this article creates
an attorney-client relationship.
Warning: ./cache is not writeable. Make sure you've set the correct relative or absolute path, and that the location is server-writable. in /home/inter154/public_html/simplepie.inc on line 1780
| Hot
Recommendations |
 |
|
| Internet
Mastery Center Blog |
The importance of having a social media marketing plan.
Do you already have a social media marketing plan in place? If you aren’t utilizing social media in your marketing plan, then you’re really missing out! Within 6 months of adding social media to my marketing, I had tripled leads and income, which isn’t something to be sneezed at. The beautiful thing about social media [...]
Red Light/Green Light TRAFFIC…
Russell Brunson has been conducting a series of ‘live’ affiliate marketing training videos that are nothing short of awesome! This Friday he’s going to reveal why it’s so easy get traffic for SUPER competitive keywords using his “Red Light/Green Light” SEO strategy. DON’T MISS IT…you’ll only be billed $1 for your registration, after which Affiliate [...]
Internet Marketing For Busy Moms (And Dads Too!)
You probably have heard stories of online rags-to-riches. You’ve seen ordinary people becoming highly respected marketing experts. You may even know of a friend who was once a marketing ‘nobody’ now having everyone calling him/her a ‘guru’. Question is: when will it be your turn? While your ‘guru’ friends seem to have a knack for [...]
13% conversion rate is ho-hum normal to some guys…
By Internet Marketing standards, a 1% conversion rate is pretty normal. You are kicking butt if you can hit 2% or 3%. But when Simon Hodgkinson and Jeremy Gislason start to hit 13% and up to 72%+ conversions, I seriously wonder whether they are playing a fair game… Well, you can find out today and [...]
All-new autoresponder with NO monthly fees!
arpReach has completed remaking its brand name from what is formerly known as Autoresponse Plus to bring you new features and improvement to its e-mailing service. What’s more, arpReach has NO monthly fees. It’s only a one-time investment for setting up as many e-mail lists as you like! Read the Top 10 Changes made to [...]
|
|
