Forum Moderators: phranque
A sudden downture, being dropped from google is you suffer from all the eggs in one basket syndrome, or a lawsuit 'frivious or valid', can spell quick ruin for a business. This is why more and more business's are employing concepts such as bankruptcy proofing. This ussally involves a complex relations of trusts and holding companies and is ussallly outside the means of small buisnesses.
Does operating a ecommerce site that only drop ships, and with the ability to move the site from one ISP to another, perhaps offshore, virtually protects a business, and thus achieves bankruptcy proofing?
The following URL has advice to go by. RRSP, GST and HST are canadian concepts, however I assume that the US has the equivalent retirement vehicles, and tax liabilities laws.
What Im interested in, is adding concepts which are unique to ecommerce sites, to the list.
If it is a small business with a single or just a few owners, the would be suppliers or creditors may want the owner(s) to join into any obligations. This would destroy the advantage of incorporation in the first place.
If you have clients, what would you think if a client appeared to be structuring to be bankruptcy proof? I did consulting engineering business for a major US corporation, one of the first of the big business scandles in recent years. I started work when they were in trouble but before the bankruptcy. I had protected myself by making counter arrangements. So when their checks started bouncing, it didn't affect me; my check was from a different entity. And I had personal obligations from individuals, just in case. (didn't need them).
So a complex bankruptcy proofing can be counter productive.
I don't think it's all that critical for most web businesses, either. To me, this kind of process is most helpful where you might find yourself the target of major lawsuits. If your business makes helicopter rotor parts, for example, you are far more likely to get sued for a bundle than if you are an Amazon web affiliate.
