More Ways in the Maze

BY NANDA SENATHI

I very much enjoyed reading the article, “The Choice-of-Entity Maze ” (March 07, page 64). Perhaps we should also consider the difference between the liability protection of a corporation and that of an LLC from lawsuits or other claims directed against owners of these entities.

A corporation generally protects shareholders from lawsuits directed against the corporation; it does not necessarily protect corporate assets from lawsuits directed against the shareholders. On the other hand, in many states, the exclusive remedy available to a creditor against an LLC membership interest involves collecting monies from a debtor-member, without disrupting the LLC business or other solvent members.

Nanda Senathi, CPA, CMA
Hermosa Beach, Calif.

Author’s reply: The letter’s author raises a good point. However, I do not think as accountants we should, or even can, expand the discussion on liability protection other than to recommend that clients consult with an attorney to properly address the nuances of the liability protection offered by a corporation versus an LLC .

Gregory A. Porcaro, CPA
Warwick, R.I.

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