One of the most attractive features of an S Corporation is the limited liability protection each shareholder receives. A New Jersey collection attorney can explain this protection in detail to you.
The Features of an S Corporation
A corporation can be formed by a group of people or another company for the purpose of doing business as a separate legal entity. As a New Jersey collection attorney can explain, the shareholders own the corporation, and the board of directors answers to the shareholders. An S Corporation is actually a tax law designation reserved for small corporations with fewer than 75 shareholders. It’s important that you consult with an attorney and/or tax expert about the consequences of forming this corporation.
Personal Liability Protection
As a New Jersey collection attorney can explain, perhaps the most attractive feature of forming a corporation for small business owners is the limited liability protection it affords. In most cases, the individual shareholders are shielded from personal liability for the acts of other shareholders. By contrast, in a partnership, each partner is co-liable for the acts of the other partners. In an S Corporation, the shareholders are generally only liable to the extent that they have invested in the company. In other words, you may lose the capital you put into the business, but company creditors cannot go after your personal assets like your house or individual bank accounts. To help ensure you receive the maximum protection from personal liability, any time you do business on behalf of the corporation, make sure you disclose this. Your signatures should include your role in the corporation (i.e. “John Smith, President of XYZ Corp”).
How We Can Assist You
The best time to talk to a New Jersey collections attorney is as soon as you contemplate forming a business. The attorneys at Snellings Law LLC can help you decide which type of business structure will best meet your goals. To make an appointment, call 973-265-6100.