A friend wants to open a business in my name. I don’t have to do any of the work, but he just uses my identity on all the paperwork. He and his millionaire friends all do this all the time, and now he wants me to become one of his puppets. Is this actually legal? What kinds of liabilities would I be opening myself up to by agreeing?
Throwaway account, I’m terrified for him to know
So only if you personally guarantee the business’s debts or do something very wrong fiscally…
Unless you personally guarantee a business loan your personal finances and your business finances are completely separate… your business can file bankruptcy and not affect your personal finance… though it can be incredibly hard to do as many loans are hard to get for unknown small businesses without a personal guarantee…
That being said I still agree - don’t do it… for all sorts of reasons, and talk to a lawyer.
What some shell companies will do is be granted imaginary credit by another company (usually an insane amount) that pumps the credit score to the 800s fast, and then they have a credit pump to use for risky ventures.
Sure, action may fail in court, but creditors aim for settlement and will drag any person they can find through a very long and expensive process. Best avoided.