Legal Question in Business Law in California
partnership vs. corporation
My partner and I are opening a service business together - music & yoga lessons. We have had suggestions to form an entity as a partnership instead of a corporation until we start making $500,000 per year. We are unsure if this is the best way to go, given the fact that one of us owns a house. Would this be unwise given the personal liability? Or would we still be personally liable as a corporation? We've been told that a corporation does not guarantee that our personal assets would not be at risk.
3 Answers from Attorneys
Re: partnership vs. corporation
In addition, I doubt you'd find an accountant who would recommend you wait until you make $500K/year to form an entity.
Re: partnership vs. corporation
Why do you use weasel-words such as, "We have had suggestions" and "We've been told"? Ever heard of the active voice? Who is giving you this advice, other music and yoga teachers, or a lawyer? No lawyer that I know of would advise anybody to go into business as a partnership.
And if you know of anybody, or any two people, who are making $500,000 per year giving music and yoga lessons, let me know, because if that's true then I'm in the wrong line of work.
Maybe it's time for me to force my body into the lotus position using the Jaws of Life.
Re: partnership vs. corporation
I NEVER allow clients to enter into partnerships. You each would be unlimitedly liable for all damages and problems caused by the other. Form a corporation and conduct it properly, you'll avoid personal liability as long as it is correctly established and properly funded. Feel free to contact me if interested in doing it right.
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