Shostack + Friends Blog Archive


Limits of Limited Liability Personas?

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

One comment on "Limits of Limited Liability Personas?"

  • Curious reader says:

    How does the “Identity Oracle” model differ from the “Infomediary” model that Hagel and Singer advocated extensively in the late nineties in, among others, their book “Net Worth”?

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