What to do if I am trying to set up a merchant account but do not credit qualify?

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What to do if I am trying to set up a merchant account but do not credit qualify?

I have a family member that is willing to set up the merchant account. They are not affiliated to the business or business bank account. I would like to know what there liability is. Are they only liable for the merchant account? If the business were to be sued, could that fall back on them?

Asked on February 15, 2013 under Business Law, Colorado

Answers:

B.H.F., Member, Texas State Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Whoever signs to be on the account will eventually be liable for the merchant account.  If the merchant agrees to extent credit only to this relative, and the relative was the only name on the account, then only the relative could be sued should the account go delinquent.  If the merchant accepts your business account subject to a co-signature by the relative, then both would be potentially liable on the account.  If the relative's name is nowhere on the account and the merchant account is only in the business's name-- then only the business would be liable. 

If the business were to be sued for an unrelated event, then it's not likely that the relative would be sued for simply co-signing for credit because they are not owners of the business.

 


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