I have been asked several times “When does my business end?”

It depends on the structure..

SOLE PROPRIETORSHIP

• Continues until abandoned or upon death of the owner
• Assets and liabilities can be freely transferred by selling all or a portion of the assets

PARTNERSHIP — GENERAL AND LIMITED

• Dissolves if a general partner dies or leaves the partnership, unless the agreement provides for continuation of the business by the remaining partners

CORPORATION — C AND S

• Exists in perpetuity even if one or more owners die
• Ownership can be transferred by sale of stock

 LIMITED LIABILITY COMPANY (LLC)

• For multi-owner LLCs, continuity and transferability are determined by the organizing and operating documents and may affect the LLC’s ability to choose corporate or partnership tax status

Legal Liability

Another common question is what is my legal liability with owning a business.  I will give the technical answer but I strongly recommend that you would get the best advice about liability from a corporate law attorney.  I also strongly recommend that you look at purchasing liability insurance to cover this risk – because if you are found innocent you will have to pay for an attorney.

SOLE PROPRIETORSHIP

• Unlimited personal liability

PARTNERSHIP — GENERAL AND LIMITED

• General partners are fully liable for all liabilities of the partnership, no matter which general partner incurred them • Limited partners are responsible only to the extent of their investment

CORPORATION — C AND S

• Shareholders are generally liable only to the extent of their investment in the business, but management generally incurs some personal liability

LIMITED LIABILITY COMPANY (LLC)

• Liability rules are similar to corporate shareholders. Members are not personally liable for the debts and liabilities of the LLC