Selecting the Right Entity
Corporation? LLC? We’ll Help You Choose!
One thing that all businesses have in common is that they can carry a tremendous amount of liability. Should things go south and your business not be properly incorporated, you might be on the hook for all of your debts and be subject to pursuit from creditors. If someone were to sue you for infringement of a trademark or even an injury on your property, an unprotected business owner will be on the hook and could face serious financial repercussions.
That’s why it’s absolutely crucial that you choose the proper business entity to protect yourself, your partners, and your investors. Breweries, distilleries, and wineries all need this type of protection, and the team from Mooney Wieland Alcohol Industry Advisors can help you set everything up properly the first time.
What is a Business Entity?
A “business entity” for our purposes is a company with its own independent legal identity, such as a corporation or limited liability company (LLC). In essence, what a business entity does is separates the actions and responsibilities of the business from you, the business owner or founder.
Should no business entity exist, you are responsible for the actions and liabilities your business may perform or take on, and will be liable in the event something happens. Why is this important? Say one of your product bottles turns out to be defective and it shatters, injuring someone. As the producer of the defective product, you are liable for damages suffered by the injured party. Without a business entity, your home, your car, your savings, and all of your personal assets would be at risk.
However, with a business entity, you separate this liability from yourself, and instead place all of that liability squarely on the business. Should that bottle break and injure someone, the business would be liable for damages, but your personal car, your personal bank accounts, your home, and your personal assets would be off-limits to the party who sues you for damages. Thus, creating a business entity and getting a good insurance policy is the best way to protect yourself when going into business.
All businesses need to have some form of classification. Primarily this is for tax purposes with both the TTB and the IRS, but there are other logistical reasons for it as well. There are several reasons for this that will become clearer as we go further.
Get the legal guidance and reputable counsel you need from the team at Mooney Wieland Alcohol Industry Advisors. Call us at (208) 295-5809 today.