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Attorney L. Reed Bloodworth is the managing partner of Bloodworth Law with offices in Orlando, Florida, and Winter Haven, Florida.
Bloodworth Law handles business litigation for Florida small businesses, family-owned companies, and corporations in business for many years.
Are You Personally Liable for Business Debt?
Are you personally liable for business debt? An answer to this lies in the manner in which you established your business. Protection from financial vulnerabilities as a business owner should be the primary concern and can be handled by working with a business litigator in creating an operating agreement or a partnership agreement.
Proper business formation, a detailed operating agreement or partnership agreement will protect you from being held personally responsible for business debt.
What Are the Options?
There are many options for setting up your business for protection including:
- Corporation
- Limited liability company (LLC)
- Partnership
But there are many others. You may establish your business as a general partnership, a limited partnership, a limited liability limited partnership, and there are others.
These entities have limited liability which means that when a business accrues debt, the business, not owners or shareholders are responsible for that debt.
There are many reasons why a business may eventually be dissolved. The operator could become incapacitated. Competition may force a company to close its doors.
Preventing Personal Liability
If you properly set up a business when you get started, there will be provisions in place for an orderly payment of debts and the dissolution of the legal entity to prevent personal liability.
Under Florida law, once a business is in the process of being dissolved, it’s essential that no employee, partner, or officer continue to do business under the name of the dissolved.
It’s important that any debt your business accrues is arranged so that the legal entity holds the responsibility, not the officers of the corporation, partners, or company officials.
Attorney L. Reed Bloodworth is the managing partner of Bloodworth Law. No matter how long you’ve been in business, talk to Reed and find out if your operating or business agreement should be revised to better protect you, your family, or your business.