MANNING & MANNING Q&A - LAKE COUNTY BUSINESS JOURNAL
March, 2006

I started a business years ago and eventually purchased the building. Both business and building are in my name. I have been told I shouldn't have it that way. Can you explain?

There is no one rule that fits all circumstances. Owning and operating real estate may have very different risks and liabilities than your core business. By including the two in the same entity the business owner risks losing both investments in one poor business cycle or tragic event. Separating the two creates greater security and lessens the risk of loss to the owner.

You stated that both the building and business are in your personal name. I strongly counsel against owning either a business or commercial building in the name of an individual. A loss or judgment, resulting from either the ownership of the business or the real estate, may be collected from personal assets, including your personal residence. I recommend creating a separate entity for the building and the business to limit the risk of loss. There are also tax benefits to this strategy and a qualified CPA could explain these in greater detail.


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Francis P. Manning
Manning & Manning Co., L.P.A.
7556 Mentor Avenue
Mentor , Ohio 44060
(440)269-8823
(440)269-8819 - fax

Providing Legal and Business Counsel with an Emphasis on Commercial Transactions, Real Estate Development, Entity Formation and Structuring, General Corporate Matters, Estate and Business Succession Planning and Probate