When you own a business and your business is sued, your own personal property may be at risk. The legal team here at Saxton Law Firm in Kansas City, MO can help you protect your assets and answer questions like – can personal property be seized when a business is sued? We can help you form a business entity to protect your assets and represent you in the courtroom if and when we are needed.
How To Protect Personal Assets When Your Business is Sued
Yes – personal property can be seized in select business lawsuits and legal scenarios. The best way to protect your business from a legal lawsuit is to incorporate it and form a corporate entity. In the event of a lawsuit and a judgment that you cannot pay, a corporate entity creates a legal separation between your business assets and your personal property and assets. This will protect your personal property from seizure unless your business has engaged in illegal activity, you have used corporate resources for personal purposes or taken part in fraudulent activity.
Business owners who wish to protect their personal property assets can formalize their business by forming a corporate entity. This legal designation separates the individual from the business in the legal sense to protect against legal liabilities – which is commonly referred to as the corporate veil.
What Are the Different Types of Corporate Entities?
When you choose to create your business, there are different types of legal corporate entities that can be put in place to protect your personal assets in the event of a lawsuit. Here is a look at different corporate entities that you can use to protect yourself and your interests.
- Sole Proprietorship – A sole proprietorship is an unincorporated business that is owned by a single individual. This type of corporate entity is simple to incorporate and costs little to set up – but does not provide any personal asset protection or tax advantages.
- Partnerships – Individuals who do not like to have 100% responsibility for the business can create a partnership. A partnership consists of two or more individuals who share the burden of costs, profits, losses and property. A partnership works much in the same fashion as a sole proprietorship.
- LLC – A Limited Liability Corporation (LLC) is a corporate entity that is simple to create and will provide business owners with a wide range of benefits. Advantages provided by an LLC include protection from business lawsuits and liabilities, tax advantages, personal asset protection, low costs and an easy setup process.
- S Corporation – This corporate entity is a corporation that passes corporate income, losses, deductions and credits to shareholders for tax purposes. A shareholder reports income and losses on their own personal tax returns and allows the business to avoid double taxation. An S Corporation does not protect personal assets in a business lawsuit and can cost significantly more time and money to get started.
How Can a Small Business Attorney Help?
Are you and your business being sued? Do you need help to avoid litigation in your case? A small business attorney – like Saxton Law Firm – can help. A small business attorney can help you negotiate a settlement, contact insurance providers as needed, act as an intermediary between legal parties and represent you in court if necessary. In addition to those services, a small business attorney can help you establish a corporate entity and avoid potential legal obstacles in the future.
READ MORE: Do I Need a Small Business Attorney in Kansas City MO?
Are you a business owner who has questions? Has your business been sued? You may want to know – can personal property be seized when a business is sued? We can help answer your legal questions and can help you prevent any personal loss here at Saxton Law Firm. Contact us today for more legal advice and information!
