Help! Will incorporating my business protect my personal debt?

[John1985]

I have an issue. I lost my job and received unemployment compensation for about a year. The state is now claiming that I was over payed while I was receiving unemployment and wants ALL of the money back! So I now owe the state money. I'm starting a business and I have a few investors. How do I protect the business from my personal debts to the state. I heard that if I incorporate my business then me and my business will become separate entities. Therefore, my business account will be protected with the investor's monies. Is this information correct? Will an Incorporation provide more protection than a LLC, or whats the difference?

[Business Attorney]

A corporation or LLC is a separate entity and either one will protect the assets of the business from DIRECT attack by your creditors. However, charging order protection (http://www.limitedliabilitycompanycenter.com/charging-order-protection.html) is a distinct advantage in most states for LLCs, particularly LLCs with multiple members (http://www.limitedliabilitycompanycenter.com/single_member_llc_vs_2.html).

State laws do vary, so you need to be sure that you consider the laws of your own state.

[The_Matrick]

State laws do vary, so you need to be sure that you consider the laws of your own state.

Sorry to bump an old post, but any updates on this one? I have a similar situation and am fishing for info on what the next move should be.

Thanks.