Business Workshop: Keep old and new businesses separate

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It will be easier the second time around.

At least, that's the idea that many business owners have once they have a successful business up and running. After overcoming the initial hurdles of starting a business -- such as hiring employees, renting office space, purchasing equipment and setting up communications and technology systems -- many business owners want to use the assets of their existing business to launch another business.

But a business owner takes many risks by co-mingling the operations, employees and equipment of two separate businesses, especially if the new business serves different customers.

The new business could create liabilities for the existing successful business.

For example, if an employee who does work for both businesses files an employment lawsuit, both businesses could be held liable. Likewise, if one business fails to pay a bill, creditors could go after the other business for payment, potentially ruining the credit ratings of both businesses.

And when it comes to taxes, it can be very complicated to sort out which company owns shared equipment, pays employees or owns other assets.

Using the same employees, office space, billing address or phone number also may be misleading to customers, banks, vendors and other businesses. They may be surprised or angry to find out that they are not dealing with the business they thought they were.

With few exceptions, business owners should keep finances, equipment and employees for a new business completely separate from their existing businesses.

Although it may mean that the owner will have to front more money for the start-up costs of a second business, separating the two businesses is a better long-term strategy.

And in the event that one business fails, it won't take down the owner and other business with it.

-- Patricia Farrell, Meyer, Unkovic & Scott LLP, pef@muslaw.com

BUSINESS WORKSHOP

Averis viverit, niam caedit audercertus iam vid scena, stiam nostili enterebem pra della vendies comnerestil vidiis. Acture condum hicae maio, confectum periaet oruniae am intem et adhuidete, temus, quonem utus manu mis nox niu sed sum intia? Egercepeste, C. Ehebus, quem omnesil invenat, no. Os hiliure munit.

Business workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at bhyslop@post-gazette.com.


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