Forums: Discussions for entrepreneurs and small business.

If I have a current company

I`m sorry if this is a bit simplistic, but I want to make sure you understand.  Businesses (such as corporations or LLCs) are separate entities and the purpose of having one is to provide a "corporate shield" to protect you personally.  It`s very important that you maintain the separation by keeping separate bank accounts, by documenting payouts, etc.  Otherwise, if you`re ever sued, the corporate shield can be pierced and you can become liable.  Having two companies is similar.

 

If the new company is going to function as a subsidiary of the current company then the answers are a little different, but the general principle is that you have to treat the two entities as separate.  It sometimes helps to think of them as two separate people.  For example, Company A, let`s call it Bob, employs 10 people.  Company B, call it Fred, employs no people.  If you want the employees of Bob to work for Fred, then Fred needs to contract with Bob and pay Bob for the service.  Whether that payment is in cash or in stock, that`s a matter for you and your attorney to decide.

 

I hope this answers your question.

 

Deena Burgess, Esq.

www.ebusinesslawgroup.com

 

Offering Affordable Legal Solutions for Small Businesses

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