Corporations and LLC’s: How Protected Are You?

You’ve heard the radio ads and seen the television commercials. Companies  advertising a quick and easy way to incorporate your business. For a minimal fee, one of these internet-based companies will provide a new business owner with the forms necessary to register with a state government and begin their dream of “being their own boss.” But is that really all it takes?

What most people do not realize is that the paperwork does not end with LLCregistration. What the television and radio ads do not portray is that in order to protect yourself from liability, you must comply with additional state laws. This is why these ads are always certain to make clear they are not attorneys and are not offering legal advice.

Every state, including Pennsylvania and New Jersey, has its own set of unique laws describing what a business must do in order for its owners to be protected from personal liability. These often including the following: (1) properly capitalizing the new company; (2) maintaining company books and records; (3) keeping company bank accounts separate from personal accounts; and (4) signing documents such as contracts on behalf of the company only.

A recent case out of Bucks County, PA, Power Line Packaging v. Hermes Calgon/THG Acquisition LLC, C.P. Bucks No. 2010-02341 (Sep. 30, 2015), resulted in the owners of an LLC being required to pay a significant money judgment which was entered against the “company” due in large part to their failure to abide by the corporate formalities required under Pennsylvania law. In so ruling, the Court sent a clear message: if you want to form and do business as an LLC in this state, follows the rules!

Anyone wishing to start a new venture should be wary of using the services of an internet-based company to “incorporate” without also consulting an attorney. The attorneys at Howland, Hess, Guinan, Torpey, Cassidy & O’Connell, LLP, namely Thomas Guinan, George O’Connell, John Howland, Dennis Meakim, and Karen Angelucci, are all available to assist a new or existing business owner to protect against unseen liabilities.

Legal Disclaimer: The contents of this website are intended solely for informational purposes. They neither constitute nor imply an official legal opinion on behalf of Howland, Hess, Guinan, Torpey, Cassidy and O’Connell nor do they establish an attorney-client relationship of any kind. Howland Hess O’Connell encourage all readers to seek and consult professional counsel before acting upon the information contained on this site.


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