Emergent Chaos

Adam: I have some cost questions, but I think more importantly, this can limit my exposure to, say, a credit card, but I can get most of this without paying Delaware a couple of hundred bucks. I get a PO box, a limited credit card, and a voice mail service. What's the advantage that's worth incorporating?

At the same time, there seem to be real limits to doing this under today's law. I don't think the Gap would be ok running a background check on AdamCorp 4735, a Nevada LLP. And as I'm sure you remember, a yet-anonymous contractor to the Gap lost data on 800,000 job applicants. (Infoworld via PogowasRight.)

Bob Blakely: These are very good questions. The difficulty with just getting a PO box and a secured credit card today is that if someone steals the credit card number and runs a bunch of charges up in some foreign jurisdiction where validation procedures aren't very good, you may get a ding on your personal credit record, which you then have to clean up even if you don't end up getting stuck with the charges. If you get the credit card in the name of the LLP, then nothing goes on your record. If the situation gets really ugly, you can simply forfeit the money backing the card, close the LLP, and walk away - with no damage to your personal reputation that needs to be cleaned up. This severability is the real advantage of incorporation. If you set up an LLC through the Company Corporation, you can even get $50,000 worth of insurance against legal fees in case someone tries to stick you with personal liability for the LLC's actions.

The Gap wouldn't run a background check unless you applied for a job. I don't think that LLPs will apply for jobs; I do think that they'll be used in a lot of transactions with intermittent or remote transactional partners, to buffer risks associated with people and organizations with whom you don't have a lot of history and interaction.

Mike Neuenschwander: I think an LLP could even work for employment-in fact, it already happens with LLCs. That doesn't mean the person has to be anonymous. But we need a system that helps build reputations of these entities, so the owners take pride in ownership.