No one even wants to think of the prospect of an accident involving one of your school buses. But in the event one does occur, it's easy to imagine an army of attorneys representing individual families aggressively pursuing compensation.
That's why a number of school bus owners consider asset protection. Forming a company for each of your buses can not only protect your personal assets in the event of a lawsuit involving one of your buses, it can allow the rest of your fleet to keep operating.
We have more than three decades of experience forming Delaware companies for people who want to protect their assets. That longevity and leadership give us the expertise to incorporate your buses quickly and efficiently, helping to protect your assets. However, we are not a law firm and cannot give legal advice. Please consult an attorney if you need legal advice on this matter.
Read more to learn about why other school bus owners have chosen to protect their assets by incorporating in Delaware, as well as how the process works.
Many school bus companies are incorporated in order to separate the assets of the company's owner from those of the business. However, if you own a school bus company and are doing so as a sole proprietor, you're putting your personal assets at risk. In the event of a lawsuit involving one of your buses, the plaintiff's lawyer often will attempt to go after your personal assets if the claim is large enough. Typically, that means your home, cars, bank accounts, and more are at risk.
Incorporating your company creates a legal wall of separation between your business and personal assets, complicating the plaintiff's lawyer's task.
Some school bus company owners will incorporate their business and title all of their buses in that company's name. While this is preferable to a sole proprietorship, all of your buses could be sidelined in the event of a lawsuit involving one bus. Incorporating each one of your buses and leasing them to your company typically ensures that the rest of your fleet can keep operating during a lawsuit.
The following strategy is one to consider if you own more than one school bus:
The overarching entity is a Delaware subchapter S corporation. This is your operating company, i.e. the one you use with your clients, and all payments flow into this company. This subchapter S corporation separates your school bus company from your personal assets, but it doesn't actually own any of the buses.
Instead, each bus is owned by and titled in the name of a separate Delaware LLC. These buses are then leased to your operating company under a separate contract. Consequently, if one bus is involved in a lawsuit, your other buses can keep operating. LLCs are used because they are pass-through entities with strong liability protection. Typically, if you set them up correctly, you won't need to file separate tax returns for each LLC.
This strategy is just one of many you can use to protect your assets. Please consult with your attorney and accountant first, and then rely on us to handle the details of filing and maintaining your company.
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Since 1981, Harvard Business Services, Inc. has helped form 140,700 Delaware corporations and LLCs for people all over the world.
Harvard can provide assistance throughout the life of your company. These custom services are the most popular with our clients: