Heavy Duty: More Liability Traps for Business Owners

Forewarned is forearmed

Unless you were daydreaming during history class, in high school you learned that the birth of modern limited liability business entities, namely corporations, was a key factor in the Industrial Revolution and America’s emergence as a world economic leader. An investment of capital that risks only that capital, not the investor’s other assets, has been at the heart of capitalism ever since. This is especially true, but often challenging, in human-owned businesses where the people who invest the capital are often investing blood, sweat and tears as business management, too.

Typically, the law splits management of a corporation into two functions: the officers (President, Secretary, Chief Cook and Bottle Washer, etc.), who run the day-to-day operations, and the Board of Directors, which supervises the officers and keeps a long term view in mind. Yes, I know that if public company Boards of Directors really did that, we wouldn’t be in our current economic pickle, but that’s not today’s subject; my concern is that people in private companies don’t keep track of the hats they wear (owner, officer and/or director) and the consequences that go with wearing them.