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Selling or Hiring in a Personal Capacity

April 13, 2006

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A small business owner acts as an agent or employee for the limited liability company (LLC) or corporation when selling goods or hiring agents or employees for the business. Acting in that capacity generally affords the owner personal liability protection for torts committed in the business.

However, there are some tort exceptions to limited liability that would negate carefully constructed asset protection plans and expose an owner to unlimited personal liability.

For example, when the business owner forms a contract to sell goods in his own name or hires an employee or agent in his own name, he will have unlimited, personal liability for any resulting torts. Note that this can only occur as a result of a serious mistake on the part of the owner.

The use of independent contractors, rather than employees or agents, can help a small business owner avoid the outcome from a tort committed by someone the owner personally hired.

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