Your Accident-Prone Baby Business


A Dream Come True

When you were just a kid, you knew that you wanted one someday. You talked about all of the great things it would do for you one day. You even went as far as picking out a name.

We’re talking about owning your own business of course. However, just like a baby, new businesses are sometimes prone to accidents too.

Except, when your baby has an accident, you don’t lose sleep wondering whether you’ll be able to keep your house.

Cover Your Assets

If you’re considering owning, or if you already own, your own

business, then you should consider protecting yourself from the liabilities of your business. Otherwise, you may find yourself paying for a long time for a simple business decision.

Under Texas law, you can organize your business structure in a manner that protects you personally from the debts of your company. Some of these structures are: Corporations (Inc.), Limited Partnerships (Ltd.), and Limited Liability Companies (LLC).

Selecting a business structure depends on your Management plan, long-term goals, investment options, and desired tax methods. (Personally, I prefer paying fewer taxes)

How Bad Could it Be?

Let’s pretend for a moment that you’re considering opening up your own flower shop. You enter into a 1-year lease for your storefront, you negotiate a contract for a steady supply of daisies, and you lease a billboard for advertisement.

Since you don’t want to waste time with limiting your liabilities, you decide to just start ordering everything with personal checks, signing leases in your name, and entering into contracts as an individual.

Unfortunately, business isn’t doing so hot and after a few months you have to close up your shop. After closing the doors, your business mail starts showing up at your house and those companies are demanding that you are personally liable for the company’s debts since on paper, it just looks like you’re an eccentric individual with a serious flower addiction.

What Else Could You Do?

Let’s go back and imagine that before you started signing your life away, you organized as a Limited Liability Company (LLC). Then, instead of signing your own name on all of those leases and contracts, you signed your company’s name as the responsible party.

Now fast forward to you closing your doors; it’s like the business was the one that entered into all of those obligations instead of you. When the creditors come calling, they come looking to liquidate the company’s assets and not your personal assets.

Get yourself some protection from your baby and you’ll get a little better sleep at night.

–Authored by Matthew L. Harris, Esq.,


Matthew Harris Law, PLLC – Business Law Division

1001 Main Street, Suite 200, Lubbock, Texas, 79401-3309

Tel: (806) 702-4852 | Fax: (800) 985-9479

[email protected]