Question

Red Red Wine is a wine bar that has been incorporated by Amie. It operates as a closelyheld corporation. The other shareholders are Amie’s brother and sister-in-law. Amie runs the day-to-day management of the wine bar, including managing the books and records. Amie’s brother and sister-in-law handle distribution, sales and marketing. After a few years, Amie starts to feel like she is doing the majority of the work and becomes bitter about the business relationship. She feels like she should be earning more money for the amount of work she does for the bar. Without discussing it with her brother and sister-in-law, Amie starts taking an additional draw from the wine bar every month in the amount of $1,000. She deposits the money into a business account for an LLC she created. On the books and records of the wine bar, Amie records this amount to the LLC as a “consultation fee.” Can Amie be held personally liable in this situation? If so, why?

Answer 1

The wine bar has been incorporated by Amie and is operated as a closely held corporation whose other shareholders are Amies brother and sister in law.

She starts taking extra amount from the wine bar without consulting the other which is wrong on her part and she can be held liable but the extra amount shes taking, shes depositing in the LLC and charging as consultation fee to the LLC in the books of the wine bar.

LLC Or limited liability company combines the elements of Partnership, sole proprietorship and a corporation.

LLC IS A SEPARATE ENTITY FROM ITS OWNER.

The main feature of LLC is that there is no personal liability for the debts of the business.

LLC is responsible for its debts or income and not the owners or the managers.

So, since Amie is depositing the money in the current account of the LLC and not her personal account, The wine bar is paying to llc and not to Amie.

Amie very cleverly removes herself from any personal liability.

Its the LLC that is Liable and not Amie.