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What doesn't your corporation/LLC liability shield cover?
- Your Own Wrongful Acts. If you are the person responsible for
a wrongful act, you will not be protected. If, in the course
of your business, you assault someone, cause an accident or permit
a hazard, you cannot then hide behind the corporation. For
example,
if your company driver hits a child waiting for the school
bus, you will not be personally liable even if the driver was
on a business
mission. If you hit the child, you will be liable.
- Personal Guarantees. Landlords, banks and many will
ask for your personal guarantee. You become personally liable
for these
obligations.
The entire point of asking for the guaranty is to make
someone liable who would not otherwise be liable. If you are
acting
for your corporation, be sure that your official title
follows your
signature. Never sign “John Doe.” Always sign “ABC
Corp”, by “John Doe, President.”
- Certain Government Obligations. A growing list of government
obligations is freed from the liability shield. These usually
include payroll
withholding taxes and sales taxes, but even property taxes
and some licensing fees may be exempt. Also, the government
exemptions
cast a wide net, so that officers, directors, “responsible
persons” and even people with mere check signing
capacity may become liable.
- Certain Acts after Dissolution. A number of states impose
personal liability on the officers and directors for
acts that occur
after dissolution. This can be trickier than it sounds.
Dissolution can
occur administratively for failure to file required
forms or pay state fees. Notice may or may not get to the corporate
officers.
- Professional Liability. Claims for malpractice against
certain professionals are not shielded by the corporate structure.
Doctors, lawyers, engineers, certified public accountants,
medical professionals
and others giving professional advise can be included,
whether they are appropriately licensed as such.
- Miscellaneous State Laws. A growing list of state laws
finds exemptions from the liability shield. This
normally involves
the employer-employee
relationship and applies to salaries, taxes and
claims that favor the employee.
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