Ask HN: Separate liability by multiple LLC's?
I want to create a SaaS product, so I filed for another LLC which will house/own the product.
I am keeping both LLC's totally separate. There is no parent LLC. I want liability to be separate so that a law-suit against my consulting practice doesn't effect my product, and visa-versa.
I also like the idea of keeping it separate, since in time I could sell my product/company, and keep my consulting practice.
This creates more overhead, but almost guarantees separate liability.
What are your thoughts on this? What have you seen in the industry? I'm finding that the overhead is kind of annoying, especially some of the cross-over. i.e. if I hire someone for my product, but in a lull want to contract them to a client, that could be interesting. Also, until my product takes off, I'm just using the existing infrastructure that I bought under my consulting practice (i.e. laptop, email, office365, MSDN subscription, etc.)
3 comments
[ 3.1 ms ] story [ 23.2 ms ] threadhttps://en.wikipedia.org/wiki/Piercing_the_corporate_veil
And specifically, for US corporate law:
https://en.wikipedia.org/wiki/Piercing_the_corporate_veil#Un...
This article notes:
"In the United States, corporate veil piercing is the most litigated issue in corporate law. Although courts are reluctant to hold an active shareholder liable for actions that are legally the responsibility of the corporation, even if the corporation has a single shareholder, they will often do so if the corporation was markedly noncompliant, or if holding only the corporation liable would be singularly unfair to the plaintiff. In most jurisdictions, no bright-line rule exists and the ruling is based on common law precedents."
Thus, before spending a lot of effort on setting up two LLCs, you should probably talk to a lawyer to see if this would give you any added protection in your situation.