Legal Question in Business Law in Florida

My partner tells me that if someone owns only 49% or less of a company, that they can't be held personally liable for debts incurred by the company. Our merchant account wants us to sign papers accepting personal responsibility for debts, including allowing them to go after our heirs, etc. The reason for our forming an LLC was to get some small measure of protection, and I have NO intention of envolving my kids in anything that happens with this company. They have their own companies, homes, etc. And I have no intention of putting them at risk. Is she correct about the 49%? Thanks for any light you can shed on this matter. Bob Kerns


Asked on 1/27/11, 9:47 am

2 Answers from Attorneys
Tracy Newmark The Newmark Law Firm, PA

She is not correct; you can be held personally responsible for certain debts of a company as an officer/director/manager. If you sign a document with the bank/merchant processor, then that is a separate contract that will make you liable irrespective of your ownership in the company.

You should absolutely confer with an attorney prior to executing any document that would create a personal liability on your part, particularly one that will "outlive" you and transfer to your heirs, etc.

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Answered on 1/27/11, 2:32 pm
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I agree with the other attorney. Ownership interest in not related to liability. And a personal guaranty is just that. It is a guaranty by whoever signs it. Whether you sign the guaranty or not is up to you. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 1/31/11, 8:41 am


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