G Consulta

Limited partnerships, corporations and limited liability companies are legal entities designed to protect your assets. Philippine law has not provided for the creation of a limited liability company. People often consider operating a business under another name to reduce the chances of being sued personally. To accomplish this task, you have to structure your business in such a way as to provide a buffer between you and the general public. You must have an organization that will take care of all business activities, such as making loans, sales, leases, and other obligations. These activities and contracts will be conducted and executed solely in the name of a legal entity.
Curbing your risks of exposure means staying away from the numerous roots of liability. A general partnership is a rich source of liability. Many experts advise that you should avoid being a general partner like a plague. As a general partner, your liability exposure is amplified because each partner is responsible for the entire debt of other partners. This means that you have to pay the entire amount if your partners cannot or will not pay his share. Any business where there is solidary liability will magnify your risks of liability. Filipinos are fond of involving family members in the operation of their businesses as a way of showing affection and trust. But this may not be a wise practice. Their close family ties often spill over into business endeavors. They form close corporations and have their spouses and children as officers and directors of their business enterprises. While it may look prudent at first glance, the risk
that officers and directors are usually named defendants thus exposing their assets to liability. If someone files a lawsuit against the corporation, all or some of the officers and directors are included as defendants, opening them to a possible adverse judgment with damages. The same is true if your spouse or any other member of your family co-signs any contract that carries financial obligations.