October 2, 2012
Week Two Learning Team Reflection on Personal Liability
Benefits to Commerce
Team C colleagues decided on the following opinions in respect to the advantages of commerce using shareholders and other entities for protection against personal liability losses. Commerce is the buying and selling of goods or services within cities, states, and globally. The legal structure of a business will establish the liable responsibilities of the business owner. When a business is established as a Corporation or an LLC this structure separates business owner’s personal assets from the business debit and liability.
The benefits of commerce acquiring shareholders or other entities to protect and shield their members from personal liabilities are a consideration that every entrepreneur should seek professional advice before starting a business. “As a separate legal entities, corporations are liable for their own debts and obligations” (Cheeseman, p. 558, 2010). By the corporation having shareholders it is limiting their loss if a potential suit arises. If they were to be sued they would be limited to the extent of their financial investment in the corporation. The officers of the corporation create a shield that protects them from liability, and from having their personal assets at risk. The benefit of having a corporation is that corporations itself becomes a legal entity; therefore the liability is taken away from an owner.
If lawsuits arise the assets of the corporation will be at risk; however, the shareholders will not bear any personal liability. Therefore, potential investors in a corporation seek to have professional executives who use good judgment in running a business. The net worth of the corporation is also determined by the shareholders investment in the business and should there be a suit the corporation stands to be financially stronger than a business owned...