![]() Unnecessarily Expose You to Personal Liability organize your business as a corporation (or LLC or other entity). Why? Because creating a separate entity for your business can insulate you, as its owner, from becoming personally liable for business debts. Nevertheless, while you've followed all the steps to create the corporation, you may have been convinced to not use your long, clunky "corporate name" for marketing purposes. Instead, your marketing guru may want you to use an abbreviated or truncated version of it or some different tradename a selected logo, more mobile-friendly, easier to remember, etc.). may be to use a short name or phrase, rather than your full entity name. be exposing yourself to the personal liability that you probably incorporated to minimize or avoid. First, statutes authorizing the creation of entities invariably state that the name of the business "shall" contain one or more of certain words or abbreviations identifying the type of entity. Corporate statutes require the name to contain something like "Corp." or "Inc." Second, since entities can only act through individuals as their agent, here's some agency law. When an agent (i.e., you) makes a contract for its principal (i.e., your business), the party who is liable as between the principal and the agent is dependent on the level of disclosure. An agent who fails to disclose that the contract is being made for its principal, is personally liable on the contract as if the principal does not exist. An agent who discloses that he/she is acting for a principal without identifying that principal also is liable personally (unless the other party otherwise agrees). Only an agent who, in making a contract, discloses both that he/she is acting for a principal and identifies that principal is not personally liable on the contract. for business with just your marketing name, you may be giving up entity protection. marketing material) is all about identifying your business with that catchy tradename, but doesn't include your full, actual business name, you could be leaving yourself open to trouble. The burden of disclosure is on you and the disclosure must have occurred by the time of transacting business that is, before or at the time of contracting. People conducting business using business cards, purchase order or receipt forms, stationery and the like with only some shortened version of their entity's legal name (particularly if omitting statutorily required words like "Inc.") or just a fictitious (albeit catchy) tradename have had to defend against claims of personal liability of the business owner. You may defend based on past dealings or some other basis from which you can show that the other party should have known you were acting as agent for a disclosed entity, but that costs you extra time and money and may not be successful. You organized as an entity in the first place intending to avoid that risk. what could go wrong. Eurowest, Inc., but also used the name "Eurowest Tours." O'Brien made arrangements with Aeroflot to provide Burch & Cracchiolo, P.A. handling commercial and real estate transactions, commercial litigation and general business representation. He is also the firm's principal appellate attorney handling civil appeals, including special actions, in state and federal appellate courts in diverse practice areas, including cases before the U.S. Supreme Court. 702 East Osborn Road Suite 200 Phoenix, Arizona 85014 bcattorneys.com |