Legal Question in Business Law in Alabama

My minor daughter wants to start a T shirt business. What do I need to protect my assets in case she is sued? She will have no employees and she has no assets, so she is judgement proof.

Asked on 4/09/12, 5:52 pm

1 Answer from Attorneys

Nancy Delain Delain Law Office, PLLC
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This is an easy one. TIME and INSURANCE is your short answer.

Your daughter should form a corporation or an LLC under the laws of your state and make use of the corporate veil that drops between the debts of the business and the assets of the owner. Remember, though, that creditors are smart enough to obtain personal guaranties against any debt that the business might get into. As a minor, your daughter cannot sign those contracts, which means you'll sign the personal guaranties, and that leaves you liable for the business's debts.

To limit your daughter's liability in the event of a lawsuit, she should have good general business liability insurance in place. You need to speak with your insurance agent about that; if your agent doesn't handle business insurance, s/he can probably recommend another agent who does.

I don't know how old she is, but your daughter should probably consider waiting until she reaches the age of majority (18 in most states) and can sign contracts herself to start her business. That, assuming she's not 17 yet, would give her the time to save up her babysitting and/or part-time job money to purchase the equipment she will need to do business. That's a hefty sum for someone who has no assets; those machines seem to run anywhere from $500 to $10,000, and she'll need a good-quality machine to do good-quality work.

I admire this young lady; she's got a real go-getter spirit and should be encouraged. With proper parental guidance, she'll go far and achieve her dream of owning her very own t-shirt business.

THIS POST CONTAINS GENERAL INFORMATION AND IS INTENDED FOR ENTERTAINMENT PURPOSES ONLY. IT DOES NOT CONSTITUTE LEGAL ADVICE, NOR DOES IT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP. FOR LEGAL ADVICE ON YOUR PARTICULAR MATTER, CONSULT YOUR ATTORNEY.

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4/10/12, 10:05 am

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