Why Oklahoma Private Investigators and
Process Servers Should Form Limited Liability Companies (LLCs) Instead of
Traditional Corporations
One thing
that America is known for is its love of the courts. For hundreds of years, the judicial system in
the United States has played an extremely integral role in helping to settle
divorces, small disputes, malpractice claims, business disagreements, immigration
matters, and even criminal charges.
Needless to say, many business owners usually find out that they are not
immune to lawsuits from unhappy customers.
Oklahoma private investigators and process servers can also find
themselves sued, and thus they should equip themselves with the legal
protections that forming a limited liability company (LLC) can provide.
Limited
liability companies can help give any process server or private investigator
the chance to cover himself or herself with a “corporate shield” of sorts. By forming an LLC, process servers and
private investigators alike can make it to where, if ever successfully sued,
their business assets are the only thing that a plaintiff can take from them. This differs greatly from companies that are simply
incorporated, and all Oklahoma process servers and private investigators need
to know this major difference.
Say, for
example, that Mark, a customer, sues Jack, a diligent private investigator in
Oklahoma, in court. Mark somehow
convinces the jury that he is right and that PI Jack is not. Furthermore, in a miscarriage of justice the
jury awards Mark $400,000. Private Investigator
Jack appeals, but he loses a few times.
Now Mark turns to Jack’s business assets to see what all PI Jack is
worth. However, Mark quickly gets
disappointed.
After a hearing on Jack’s private investigation
company’s assets, the courts determine that Jack’s business only has $3,000
worth of business equipment, assets, and property. Everything else Jack owns is his own personal
money and property. Because Jack’s
private investigation firm does not have the other funds, Private Investigator
Jack realizes he can never pay off $400,000 and decides to have his company
declare bankruptcy.
After the
bankruptcy goes through, Mark, the plaintiff in the case, walks away with his $3,000
and the satisfaction of knowing that the “evil” private investigator’s company
is now bankrupt. Private Investigator
Jack, thankful that Mark could not touch his personal assets that amounted to
$750,000, puts on his Oklahoma process server hat and forms a new company,
which is also a limited liability company.
As a process server, Jack also
expands his business to include other fields, making sure to take out
protective professional liability insurance.
Process Server Jack knows he cannot declare bankruptcy for many years to
come, so he takes great care to sign special agreements with his clients, which
serve to further protect him from lawsuits.
Now Jack brings his previous customers on board to his new business, and
he enjoys the fruits of his labour.
Having said
all of this, courts can still pierce the corporate shields that protect
business owners from having all of their personal assets take from them. For example, if Private Investigator Jack had
mixed his personal assets with his business assets, then Mark could have asked
the courts to pierce this shield. This
is just one of several ways in which this can happen.
All
Oklahoma City process servers and Edmond, Oklahoma private investigators should
remember another important thing though.
If their business is especially large, all of those assets are subject
to a lawsuit. Thus, if Private
Investigator Jack’s private investigation company had amassed assets of
$400,000 or more, then Mark could have successfully taken those away from him. Mark just could not have touched any of the
owner’s personal financial assets.
The
corporate shield that limited liability companies have was especially meant to
protect small businesses like private detective agencies and Oklahoma process
server companies like Oklahoma Judicial Process Servers www.OklahomaJudicialProcessServers.com. Otherwise, many business owners might not
want to take the risk of starting a business and possibly losing both their company
and personal assets. All smart private
investigation and process server companies in Oklahoma should definitely form
limited liability companies, instead of simply becoming incorporated.