If we incorporate, will liability be removed?

A homeschool leader asks questions about limited liability for the leaders.

I have been ask to join a homeschool group leadership team as secretary and they are in the process of incorporating the group.  My first question is after the group is incorporated will the liability be removed from the members of the leadership?

My second question is that the incorporation application only ask for the name and address of the president, vice president, secretary and treasurer.  There are a several more on the leadership are the four people that are listed on the application more liable than those who are not listed and also why does more than one person have to be listed on that application?

I want to thank you for your time and also all that you do for homeschoolers.  You are a great help!!!!!

Amy

 

Amy,
You asked, “after the group is incorporated will the liability be removed from the members of the leadership?”

Incorporation provides limited liabilityfor your board members. For the most part, liability is limited to the corporation, and any lawsuits will not affect the leaders personally. But be aware that anyone could still sue your officers in cases of neglect or fraud. Corporate status does not protect individuals in cases of fraud or gross negligence.

Your second question was, “are the four people that are listed on the application more liable than those who are not listed?”

No; any and all board members share responsibility and therefore share liability.Here’s a blog post on board members responsibilities: https://homeschoolcpa.com/what-are-the-legal-responsibilities-of-homeschool-leaders/

The form just asks for names of the officers (those positions listed) as they usually have the greater responsibility in running a nonprofit.

“Why does more than one person have to be listed on that application?”

In your state is is necessary for there to be more than one person to form a nonprofit corporation. I think that is a good idea.  For example, in PA a single individual can form a nonprofit, which I think is usually a bad idea.

Individuals can form businesses alone, but a nonprofit should be run by a team of people so no one claims the groups is “theirs” or tries to keep any excess money for themselves. I’ve seen both happen in homeschool groups founded and run by a single person and it is not good for the group.

I hope that helps!

Carol Topp, CPA

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