Legal Question in Business Law in California

Re: Debt responsibility after

Dont pay. you are not personally liable

Re: Debt responsibility after dissolution

Mr. Koury is probably right that you don't have to pay personally, but I'd like to add a bit to his analysis.

If a corporation is set up properly and if it is run by people who observe the formalities required by law, then the owners are not personally responsible for corporate debts. It is very common for small corporations to fail to follow the rules, thus opening the owners up to personal liability on the theory that they didn't actually have a separate corporate entity and thus should not be protected personally from the company's debts. Making such a claim is not easy, and I really doubt any plaintiff would bother for a $400 invoice.

You should be sure to account for this debt when you dissolve the corporation. I'm no expert in dissolutions, but I would be leery about ignoring a known claim when you wrap up the corporation's affairs.

Corporations often escape debts by declaring bankruptcy; so long as the formalities have been observed, the owners' finances are not affected. Simply dissolving a coprporation and ignoring a known claim could result in a personal suit against you later for your decision to disregard the claim.

As I said, however, the small amounmt at stake here makes such actions less likely.