My dream was soon coming true. I was ready to close on my investment property, which I was transforming into a Pet Grooming Salon. I’m calling it “Shinny Pets”. As I signed the closing documents I asked myself, am I protected? I recall my attorney telling me to set up a corporation for my new business and for the property I was purchasing. It will be under my name I don’t think anything will happen and it sounded like a lot of work so I backed off and didn’t go through the corporation. I should be fine!
Two months go by and my business is taking off. I hired two employees, Janet and Amanda. I went through their duties on the first day and they were happy to do the job. They serviced the front desk and walked the dogs before and after their grooming session. They greeted customers and maintained the area clean. They seemed like trust worthy girls and I was excited to have them help me.
One afternoon, Amanda took one of the bigger dogs for a walk, Hercules, a Saint Bernard, unaware of the strength he had she was dragged and seriously hurt on her face and knees. I had two problems here, Amanda was hurt and the dog went missing. I didn’t have a procedure in place for this. What do I do? I called the owner and informed him what Hercules did and he went missing. The owner was very upset and to my assumption went looking for him. I helped Amanda, by cleaning her up with water and a bandage, and at that point we all went home. The next few days, Amanda didn’t show for work. I went about my business. A few more days passed by, and the mailman was at my door with TWO certified letters awaiting my signature. I opened the first letter and it was a “letter of intent” from Amanda’s attorney requesting information from my business, to be produced in 5 day of receipt of the letter.
Articles of Incorporation
Operating or Shareholders Agreement
Certificate of Fictitious Name
The second letter was from Hercules owners, also a letter of intent demanding information for my business. I went to my attorney’s office the next day. When he read the letters he looked at me with a blank expression. He asked one question, did you ever incorporate? I replied with a heavy no, why? So he asked, you were operating a business under your name, only? Yes, why?
Well, you are completely exposed. Your employee is going to sue you for putting her in danger. How did I put her in danger? You told her to walk that dog when she never had done it before and she didn’t want to or agree to do such a job due to lack of experience but she was working there and she accepted the job to walk the dogs. The attorney asked, did you do an employment agreement defining her duties? No I did not. So how can we prove that she accepted that duty? She seemed like a trust worthy girl.
Your home is in danger your bank account can be garnished you will be sued, but what does my home and personal bank account have to do with anything? It happened in my business under my investment property not my home. Everything you own in your name is exposed and they will sue you under your name. If you would have opened the corporation for the business and operated properly the business would have been sued not you personally. The investment property and business would have been sued under its corporate names not yours and you would have avoided this personal liability.
That’s why I told you to incorporate so you keep everything separated. Why didn’t you do it? We could have helped you, assured that everything is in place for you to operate legally. My timid response was, I didn’t think I needed it and it was going to cost me $600-$800 to incorporate. The attorney responded with, well now that you saved $600-800 dollars, are you ready to spend just that for me to respond to these letters, not including anything else that comes up? If you want to keep your grooming place we will have to try and settle these two matters and then you will have to incorporate and have all the proper set ups for a business to avoid this from happening again. I will try my best to keep this out of court but cannot promise anything. You will also have to take that sign down for Shinny Pets. That name is already in use and thankfully you aren’t being sued by them too.
Here are the MediLaw Firm we will guide you through the entire process of incorporating and opening your practice. We will guide you on what to have to be protected.