Could my parents be held legally liable if someone sued my business under a sole proprietorship in my name?

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Could my parents be held legally liable if someone sued my business under a sole proprietorship in my name?

I live in my parent’s house, and I just wanted to be sure that my parents would NOT be liable if in the extremely unlikely event someone sued my business it would be a small online-based business. Could it be possible for someone to go after my parents since I am technically ‘operating’ in their house? Or not does it not work like that because the business is in my name and not theirs?

Asked on February 23, 2017 under Business Law, Massachusetts

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

They would potentially legally be liable if they were involved in some way in your business or in the violation, act, infringement, etc. which caused the lawsuit. That means that if they let you live there for free (providing you the office space for free), let you use their internet, or otherwise provide the resources you used to do something wrongful, they could possibly be liable--certainly, even if in the end, they could defend themselves by showing that they are not in any real way involved, they could very plausibly be sued and forced to defend themselves against the lawsuit. You want to establish an "arms length" relationship and provide as much of your own resources as possible, to insulate them: e.g. provide/pay for your own internet and phone; use your own computer, which you can show is only yours and not a family computer; maybe pay them rent (with a written lease) for the portion of the house you use for the business (even if only $100 - $200 per month for a corner of a room and a desk); etc. (And if your business can't support such minor costs, it's probably not worth pursuing.)


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