Personal liability for billing LLCs and Inc.s

[480sparky]

Not sure what to title this, but no, this isn't a thread about personal liability for LLCs and Corporations.

I've been wondering about some of the small LLCs and Inc.s I've been doing work for lately. I'm not sure of their true financial situation, so I've been thinking about having someone high up the the company sign an agreement at assume the company's debt (to me) if they should go belly up or otherwise cannot pay me.

In todays' economy, I'm thinking I should have my LLC and Inc customers sign such an agreement. If Joe Sixpack of Fly-By-Night Construction just closes up shop, at least the agreement would give me another target to shoot at.

Anyone know of, or have, a sample form for such a purpose?

 

[tkb]

When I was in business I was an S-Corp and had an Inc. on my company name.
I found that it does not give you protection.
All of the credit lines that I had required me to sign a personal guarantee that held me personally responsible for the debt of the company.

Get someone to sign a personal guarantee so you have some recourse in case they go out of business.

 

[wireguru]

Not sure what to title this, but no, this isn't a thread about personal liability for LLCs and Corporations.

I've been wondering about some of the small LLCs and Inc.s I've been doing work for lately. I'm not sure of their true financial situation, so I've been thinking about having someone high up the the company sign an agreement at assume the company's debt (to me) if they should go belly up or otherwise cannot pay me.

In todays' economy, I'm thinking I should have my LLC and Inc customers sign such an agreement. If Joe Sixpack of Fly-By-Night Construction just closes up shop, at least the agreement would give me another target to shoot at.

Anyone know of, or have, a sample form for such a purpose?

what you are looking for is a personal guarantee. heres a good read http://library.findlaw.com/1999/Dec/1/128035.html make sure you get their SSN on it

if they balk at the personal guarantee, explain to them that you are extending them credit, no different than if you handed them a Visa card. You had to do the same thing at the supply house that gave you the materials for their job.

If they are a publicly traded company with strong financials then fine, but a two guy operation who spent the $750 to inc, always get a personal guarantee. If they refuse, then that is an indicator of things to come.

 

[satcom]

what you are looking for is a personal guarantee. heres a good read http://library.findlaw.com/1999/Dec/1/128035.html make sure you get their SSN on it

if they balk at the personal guarantee, explain to them that you are extending them credit, no different than if you handed them a Visa card. You had to do the same thing at the supply house that gave you the materials for their job.

If they are a publicly traded company with strong financials then fine, but a two guy operation who spent the $750 to inc, always get a personal guarantee. If they refuse, then that is an indicator of things to come.

Good subject!

"always get a personal guarantee. If they refuse, then that is an indicator of things to come."

How true, yet some are so caught up with getting what they think is paying work they fail to secure their payment.

 

[480sparky]

Thanks for the replies so far. I didn't know the proper term for it, but now I know what to search for.

I have found this and this, which gives me a great start to work from.