Business Formation

There are two major reasons to form a corporation, LLC or other business entity:  (1) limit liability to protect your personal assets and (2) define the operations of the business between two or more people.

Limiting Liability - When a business entity is run properly (simply registering your LLC/corporation is not enough!) you can protect personal assets.  For example, your business enters into a contract with a third party.  The third party believes you violated the agreement and wants to sue.  If your business is its own entity, the third party will have a very hard time suing you as an individual for your personal assets.

Defining the Operations of the Business - Forming a business entity also allows you to define the important aspects of the operations of the company when two or more people are involved.  

What do I mean by "operations"? - There are so many things to think about when running a business with other owners, including the following:

  • Profits - How are profits distributed between the owners, and when is the money distributed?

  • Liabilities - Who is liable if the money is owed to creditors?

  • Voting - What decisions need majority vote, and who runs the day to day operations?

  • Company Property - How is the company property (tangible and intellectual property) split up if your company dissolves?

  • And much much more....

Keep in mind, in most states, simply because you didn't sign a partnership agreement, does not mean you are not considered a partnership.  The downside, the state's laws will define the operations of the business (e.g. everything split equally regardless of whether one partner contributed much more than another).

Have more questions? Contact Colin now.

Whiskey Ghost Entertainment Law

Colin Maher, Attorney at Law

615 - 721 - 2233

604 Gallatin Ave., Suite 206

Nashville, TN 37206

Legal services discussed are provided by Colin Maher, Attorney at Law, as a sole proprietor. he foregoing materials contain abbreviated and generalized information presented purely for educational, promotional and general information purposes only and shall not be deemed either legal advice given by or a solicitation for business by Colin P. Maher, Attorney at Law nor shall it create an attorney-client relationship.  The materials should not be relied upon or construed as legal advice and may be out of date.  Always secure legal consultation with a qualified attorney. Colin P. Maher, Esq.  neither assume nor bear any liability or responsibility for errors or omissions in the contents of these materials.