Aaliyah is concerned about keeping her own assets separate from risks associated with her business. What legal action would protect her personal assets from her business liabilities? (1 point) Responses Incorporation Incorporation Investments Investments Contract Contract Compliance
Incorporation
The legal action that would protect Aaliyah's personal assets from her business liabilities is incorporation.
To protect her personal assets from business liabilities, Aaliyah can take legal action by incorporating her business. Incorporation is the process of registering the business as a separate legal entity, distinct from its owners/shareholders, which helps create a liability shield. Here's how she can do it:
1. Research: Aaliyah can start by researching the different types of business structures available in her jurisdiction, such as a limited liability company (LLC) or a corporation. Each structure has its own benefits and requirements.
2. Choose the Type: Based on her research, Aaliyah should choose the business structure that best suits her needs and goals. For example, an LLC or a corporation offers limited liability protection, meaning her personal assets won't be at risk if her business faces financial difficulties.
3. File the Necessary Documents: Aaliyah will need to file the required documents with the appropriate government agency. This typically involves completing and submitting articles of incorporation or articles of organization, along with paying any applicable fees.
4. Fulfill Legal Requirements: Depending on her jurisdiction, Aaliyah may need to fulfill additional legal requirements, such as obtaining a federal employer identification number (EIN), drafting bylaws or an operating agreement, and holding initial meetings or elections.
5. Maintain Corporate Formalities: After incorporation, Aaliyah should actively maintain corporate formalities, such as holding regular meetings, maintaining separate financial accounts for the business, and following all legal and regulatory obligations. This helps ensure the liability protection remains intact.
It's important for Aaliyah to consult with a qualified attorney or legal professional to guide her through the incorporation process and ensure compliance with all relevant laws and regulations.