If i form a sole prop, and I am a minor, can my parents be held responsible?
Im 16 and just recently filed for a DBA online at my states website. My parents didn't sign nor did I put their name on anything. Can they be held responsible for anything I do? Are there assests at stake? And if so, how can I protect myself(and them)?
I signed up for it today, and I was not required to put in my age, just my SSN, address, and other info. I may not be able to get a car loan Jeremy(because it is an enforcable contract and i am a minor), but I wouldn't be the first minor to get a DBA. Just do a search on these forums.
Yes, you can get a business license when you are underage at least in Georgia anyway. But, then you are held resposible.
Here is a quote from the corporate.com web site
"Limited Liability Company (LLC)
The LLC is not a corporation, but it offers many of the same advantages. Many small business owners and entrepreneurs prefer LLC’s because they combine the limited liability protection of a corporation with the "pass through"" taxation of a sole proprietorship or partnership.
LLC’s have additional advantages over corporations:
LLC’s allow greater flexibility in management and business organization.
LLC’s do not have the ownership restrictions of S Corporations, making them ideal business structures for foreign investors.
LLC’s accomplish these aims without the IRS' restrictions of an S Corporation.
LLC’s are now available in all 50 states and Washington, D.C. If you have other questions regarding LLC’s, be sure to speak with a qualified legal and/or financial advisor."
I belive that you are held a little responsible, and yes being underage it would fall back on your parents. Hints the name Limited Liability!
Personally I would go with an incorporation then you almost 100% would not be liable, but now if you stole $500,000 dollars of peoples money, then I am sure something would be done. But, I am not a lawyer, this is just from experience, and discussions!
Before you do any of that, ask a lawyer. You most likely aren't of legal age to sign a DBA or sign for a LLC, however they might not check this (in other words, just because they didn't check, doesn't mean that you can do it, and that doesn't mean if there was a problem that you and your parents wouldn't be held liable).
Maybe you can get a DBA at age 16, maybe not, legally.
LLC liability isn't to protect your parents from your actions. You need to stop and ask someone who knows about this about the laws in your state. There's no excuse not to and ignorance will not be an acceptable defense (trust me, they don't buy that one).
This isn't to bag on you. I'm telling you this so that you can accomplish the goal you are setting out to accomplish. If your aim is to limit liability for yourself and your parents, a lawyer and a CPA will be able to advise you on how to do this. Just signing up for an LLC does not release you from any and all liability (read: enom, whitewater, etc.).
You need to find out some information. Hoping it will all work out, won't cut it if something happens and as I said, ignorance isn't a defense.
yes chicken, good points. im just want to make sure that if someone sues me(believe me, im not wishing on it) because of my business that they dont take my parents house or something. better to ask now, then left looking stupid after the s--t hits the fan.
Yes, it would be better to form an LLC, but even better to form a Corporpation! I am not sure how your state does it, but when I went and got my first one, I paid $50 and got it right then no mater what my age. Although, it has been a few years!
Also, you can incorporate in any state you want to, no matter where you live, there are a few things you might have to do to do it, but it would be best, and cheper to incorporate in Deleware, as Deleware is the most Corporation friendly state in the US, and there fees are a lot less, and I think they have some kind of a good tax system, that works well for corporations, or something.
But, after you do it might be cheaper to go through corporate.com! I know lawyers around here charge $750 or so, and you can do it on corporate.com for around $250 or so in Deleware, I think, but I would check it all out first!
It looks like you filed a fictitious name(DBA) for a sole proprietorship in Pa. This type of business makes you personally responsible for the liabilities of the business. Since you are a minor, your parents would be responsible for your debts including the debts/liabilities of the company.
I would suggest incorporating your business. The filing fee is around $100 in Pa. http://www.dos.state.pa.us/corps/forms.htm Take note, The incorporation paperwork doesn't automatically make you liability free from the debts of the company. Talk to an accountant or buy a good book on running a business to decrease your personal liability.
I am not sure if a minor could incorporate! His parents could for him, and then no one would be held responsible, only as a corporation.
Also BrianF read this quote from the corporate.com website!
"Advantages of a Delaware Corporation or LLC::
Over 50% of all companies on the NY Stock Exchange are Delaware corporations. Delaware has a long heritage as a business-friendly state and may be a good choice if you intend to take your company public and offer publicly traded stock. Delaware has many other advantages, including low incorporation fees, low annual franchise taxes, and no state corporate income tax for corporations that operate outside of Delaware. Furthermore, Delaware maintains a separate court system for business, called the "Court of Chancery." This Court is known for its well-established record of decisions and speed at which it handles disputes. So instead of spending your valuable time in court, you can spend it running your business. Be aware, however, that if you incorporate in Delaware while your business is located outside of Delaware, you may need to qualify to do business in your home jurisdiction. This may require an extra step and an additional fee to your home state. The Company Corporation® can assist you with incorporating or forming your LLC in Delaware and qualifying that corporation or LLC in any state you choose."
I think you stopped reading half way through the paragraph!
"Be aware, however, that if you incorporate in Delaware while your business is located outside of Delaware, you may need to qualify to do business in your home jurisdiction. This may require an extra step and an additional fee to your home state. The Company Corporation® can assist you with incorporating or forming your LLC in Delaware and qualifying that corporation or LLC in any state you choose."
If you are conducting business outside of Delaware, the following requirements apply:
The company must register where it conducts business as a foreign corporation. This requires additional registration and annual corporation fees.
A registered office and agent must be maintained in Delaware.