Looking for positives, but especially negatives. What are the pitfalls of not granting corporations the same rights as people/citizens?
He incorporated to prevent losing his house from a customer suing him.
Why should he be immune just because he wrote something on a piece of paper? Why shouldn’t that limited liability just be a thing to start with?
Because if we didn’t have such protections, the ONLY people who could ever afford to go into business are the already-super-wealthy.
Nobody would ever open a small business if it meant risking the roof over their childrens’ head.
I’m asking why the paper is necessary, as in why shouldn’t the limited liability just be a thing that exists in the first place.
Because the line does need to be drawn somewhere. You can’t just go out, cause harm to someone, and then claim “Oh, that harm was done by my company, not me personally. Incidentally, my company only has like $20 in assets for you to recover.”
The paperwork also doesn’t entirely grant you the limited liability. You need to actually operate the company as a separate entity from yourself. If you “piece the veil” between individual and company, you may not be able to claim limited liability in court.
It could exist as an automatic thing, but you need to carefully define in what situations it exists. If anything goes someone will do something absurd - my company is a hitman for so you can’t try me for murder only my company which only has the pistol for assets. Now take the above but for something that is borderline - where are the borders. Should my car automatically be owned by a LLC (this is how most small airplanes are - you often don’t sell the airplane you sell the company that has that airplane as an asset). There are many many situations in life where a LLC might be useful, most of us don’t bother most of the time and are just fine, but maybe we should anyway?
However there is a different consideration: in pretty much all cases where someone wants a LLC the will need some paper anyway because they want different taxes and so you may as well require paperwork for all cases even those few where taxes won’t be a factor.
