In essence, both entities are considered
by admin on Mar.30, 2010, under Uncategorized
In essence, both entities are considered to be ?persons? under the law. This legal fiction is, of course, what gives rise to the asset protection element of both entities. Unfortunately, many small businesses don?t understand this distinction and lose the asset protection when the most need it.
To maintain the asset protection benefits of a business entity, you must treat it as an independent party. For instance, you do not ?own? a corporation. Such statements can come back to haunt you when a plaintiff?s attorney presents them in court while arguing the entity is a sham. To avoid this problem, you can simply say you are the President of the business entity or whatever position you hold.
In Closing
Forming a business entity is a necessary step for most small businesses.
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