The oil spill is going on two months not.  There are numerous reports that BP purposely avoided safety protocols in order to save money.  The result of these decisions have caused the worst oil diaster in U.S. history far exceeding the leak by Exxon. 

Leaders of BP met with President Obama to discuss the oil spill.  Discussion revolved around the suspension of BP dividend payment and a committment of $20 billion for clean up and damages to local business who have suffered in the crisis.  Experts are now saying that the liabilty of the company could even exceed $20 billion.  It is uncertain on what the final tally will be after the company pays out all legitimate claims.  Experts are even speculating that BP won't be able to survive after all is done.  Clean up of the Gulf of Mexico can run in to years if not decades.  There are still pockets of problems with Prince William Sound where the Exxon Valdez oil spill occured. 

Although the employees of BP aren't financially responsible for the incident because of the liability protection of personal assets in forming a corporation.  The company however is vulnerable to lawsuits due to its negligence in the matter.  Although people are not usually liable, the CEO and leaders who made these decisions to avoid safety protocols may be criminally liable for their actions.  So therefore liability protection may protect personal assets, individuals are still responsible for their actions.

To find out more about corporate liability protection, you can visit our information page.

We often get calls here with clients asking, "Why should I incorporate my business?" well the answer is simple, whether you want to incorporate or form an LLC you will be protecting your assets. What a corporation or LLC is essentially doing is creating an entity that is separate from yourself, meaning that your entity is not attached to anyone's personal assets. This doesn't mean you don't have control over your business. It is also important to remember if you run your business recklessly a court can pierce the corporate veil. What that means is that even though you have the liability protection, there is an extent to this, for example, if you're found to be making fraudulent transactions, a court will hold you personally responsible for the transactions regardless of your corporation or LLC status. If you're wondering which type of entity you should file, whether that be an LLC, S-Corp or Corporation, we suggest you contact your CPA as they will be able to assist you as to which entity would suit your needs best. If you have any questions you can always feel free to call us at 866-999-8200.

One of the best parts of forming a Corporation or Limited Liability Company is that it provides the owners personal liability protection.  Actually, this is one of the main reasons for forming a Corporation or LLC. 

When running a sole proprietorship, the responsibility of the company is squared onto the person running the business.  Therefore, if a customer gets hurt from any negligence related to the operation of your business, your personal and business assets are liable to a lawsuit.  However, if you file a Corporation or LLC, your personal assets will be protected.  In running your business, the individual working for the Corporation or LLC is not obligated to pay any debts or claims against the company.  Only the business assets and what assets the individual brings to the Corporation or LLC is vulnerable to a lawsuit.  Therefore a creditor can't legally sue for your personal assets such as your home or your car. 

There are exceptions to this liability proection however.  Actions done by an individual while directly working for the Corporation or LLC can make this individual vulnerable to a lawsuit.  These exceptions include events such as the person directly injuring another person, if the person co-signs or guarantees a loan, co-mingling assets between the business and person, or fraud. 

To keep your business affairs separate from yourself it is vital that you maintain separate bank accounts.  Do not pay for business expenses using personal accounts.  It is a good idea to maintain good bylaws and a operating agreement depending on the business type. 

Although, the liability protection protects you as a person from any debts and obligation, you must also protect your business as well.  There are many types of liability protection that you can obtain for the business.  Like most insurance, fees can vary drastically depending on the coverage and provider.

You can read more at our Limited Liability for LLC and Limited Liability for Corporations pages.