Corporate Law Forming LLC with a Business Entity as partner

[ChloeElan]

What liability or risk exposure would there be to forming an LLC (two members), one partner as an individual, the other partner named as a business entity? The business entity partner is a business consultant employing several independent contractors.

 

[dee_dub]

It's not clear what you mean by "business entity", and without knowing what you're doing and how the business is structured and what the risks are, this is sheer speculation. If something goes wrong, and you and the business entity are left with some kind of liability, the business entity might have no assets and you might be left solely liable.

 

[ChloeElan]

My husband is forming an LLC with a partner who already has a business coaching business. The partner hires independent contractors to assist with the various needs of his coaching business such as accountants, attorneys, software instructors, credit counselors, etc. The purpose of the newly formed LLC is to provide financial services, brokering commercial loans and credit monitoring.

In the formation of the LLC, the two members are listed as my husband (an individual), and the name of the partner's "umbrella company" for his business coaching endeavors.

Could the LLC incur any risk or potential liability - vicariously - from any of the actions of the business coaching if the LLC were to refer clients to the business coaching biz? My husband wanted to keep the LLC and the business coaching businesses (of which he has no connection) distinctly separate, but the business coaching biz is listed as the partner in the LLC paperwork. Hope this helps to clarify. Thank you for your assistance.

 

[dee_dub]

Could the LLC incur any risk or potential liability - vicariously - from any of the actions of the business coaching if the LLC were to refer clients to the business coaching biz

Possibly. But it might face the some sort of liability whether the other partner is the business or the partner in his personal capacity. (Courts sometimes treat corporations as extensions of the people who control them.) I don't know whether person/corporation will make any difference to this kind of liability.