Mark and Programmer are still open to liability on "back end". Without realizing it, each trusts other to properly run their independent businesses. Why is this?

Assume that Mark and Programmer follow above plan and business is very profitable. One day, Programmer is served with a lawsuit claiming that he violated copyright laws with a program that he developed before meeting Mark. The nine companies to which he sold program also sue him. The trial goes badly and Programmer is found liable to tune of $750,000.

Guess what happens next? Since he is a sole proprietor, Programmer's interest in joint business with Mark is seized to satisfy judgment. Alternatively, he files personal bankruptcy. Either way, Mark is involuntarily going to have a new business partner that probably can’t program! In short, we are talking about a disaster.

How To Protect Yourself

Business entities are key to limiting your exposure to liability. In above situation, Mark and Programmer should own joint company as individuals, but they should form business entities for their personal businesses. If personal businesses are sued, their individual ownership of joint venture entity is shielded from attachment.

As a general rule, you should form an individual business entity for each business you own. By doing so, you are better able to limit potential damage of a lawsuit involving one of businesses.

The Bait: Make money through products and services you sell as well as those sold by people you recruit into program.

The Switch: Consumers say that they've bought into plans and programs, but their customers are other distributors, not general public. Some multi-level marketing programs are actually illegal pyramid schemes. When products or services are sold only to distributors like yourself, there's no way to make money.

Travel and Vacation

The Bait: Get a luxurious trip with lots of "extras" at a bargain-basement price.

The Switch: Consumers say some companies deliver lower-quality accommodations and services than they've advertised or no trip at all. Others have been hit with hidden charges or additional requirements after they've paid.

Business Opportunities

The Bait: Be your own boss and earn big bucks.

The Switch: Taken in by promises about potential earnings, many consumers have invested in a "biz op" that turned out to be a "biz flop." There was no evidence to back up earnings claims.

Investments

The Bait: Make an initial investment in a day trading system or service and you'll quickly realize huge returns.

The Switch: Big profits always mean big risk. Consumers have lost money to programs that claim to be able to predict market with 100 percent accuracy.

Health Care Products/Services

The Bait: Items not sold through traditional suppliers are "proven" to cure serious and even fatal health problems.

The Switch: Claims for "miracle" products and treatments convince consumers that their health problems can be cured. But people with serious illnesses who put their hopes in these offers might delay getting health care they need.

A Problem For Your Site?

These issues must be addressed if your site falls in one of these categories. Simply raise issue in a prominent area of site and tell prospect why it will not be a problem on your site. Failure to do so will result in lost sales.