I helped set up a small LLC with two other people last year. I did most of the paperwork and basically acted as the organizer. Now the company has some unpaid bills and one of the other members is saying I'm personally responsible because I was the organizer on the formation documents. Is that true? I never signed any personal guarantee for these debts.
Liability
Does being the organizer make you responsible for the company's debts?
Organizer on the formation docs is just an administrative role. It doesn't make you personally liable for company debts. The LLC is a separate legal entity. Unless you signed a personal guarantee or commingled funds, you should be fine.
Yeah, the other member is probably just looking for someone to blame. Did you sign anything with the creditors? That's what matters.
No, nothing with creditors. I only signed the formation documents as organizer. The bills are for office supplies and a small lease.
Lease could be tricky. Did the lease have a personal guarantee clause? Many small commercial leases do. If you signed it as organizer without a PG, you're likely okay, but if the LLC was newly formed, landlords often ask for one.
Not a lawyer, but generally an organizr is not liable just for organizing. However, if the LLC was not properly formed or you missed filings, a court could pierce the veil. How long ago did you form it?
Formed about 14 months ago. All annual reports are filed. The lease was signed by all three members, not just me.
If all three signed the lease, then all three might have exposure if there's a personal guarantee. But that's separate from being the organizer.
Actually, signing the lease as a member doesn't automatically create personal liability either. It depends on the language. If you signed in a representative capacity for the LLC, you're not personally on the hook unless there's a guarantee.
This is why I refuse to be the organizer for anything anymore. People assume you're the boss and therefore responsible for everything.
The other member might be confusing 'organizer' with 'managing member' or 'registered agent.' Those are different roles. Organizer just files the paperwork. Managing member runs the company. Registered agent receives legal notices. None of them automatically make you personally liable for debts.
I'd pull the the operating agreement. It might spell out who is responsible for what. Also check if the debts were incurred in the LLC's name or someone's personal name.
The debts are in the LLC's name. Operating agreement doesn't mention personal liability for organizers. I thhink the other member is just stressed about the bills.
Stress makes people say dumb things. But legally, you're probably in the clear. If they keep pushing, a short consult with a business lawyer might be worth it just to shut it down.
Agreed. Also, make sure the LLC's liability insurance is up to date. That's what should cover the bills if they're business-related
And document everything. If the other member keeps accusing you, you want a paper trail showing you acted properly as organizer.