Hobby Lobby Stores, Inc. is based in Oklahoma City, and as its name indicates, it is a registered corporation. Companies do not have to incorporate, you see. It's perfectly possible for a business owner to run his business without ever adding that colorful "Inc." to the end of his company's moniker. But David Green incorporated his picture frames business at some point during its formative years.
Just why did he choose to do that? The reasons are many, and they lie at the heart of why David Green is dead wrong in his current line of argumentation. Any second year law student can identify the first reason for incorporation. That's the protection of the business owner's personal assets from liability. When a company is incorporated, the business's owners are protected by a corporate veil of sorts. In the vast majority of instances, they cannot be sued personally for a host of things that might bite into corporate profits. If a person slips and falls at a Hobby Lobby store, he might seek a judgement from the company, but he will not be able to sue David Green personally. If the company goes bankrupt, chances are good that a creditor will not be able to go after David Green's personal riches.
This is important for David Green, too. This God-fearing Christian is worth $4.5 billion according to Forbes. By availing himself to a corporate designation, Green shields himself from any liability beyond that incurred by the company.
Incorporation also affords the company a sort of perpetual existence. When the owner of a sole proprietorship dies, the company is buried with him. If the business is incorporated, it outlives its original founder. This designation provides a level of independence for the company, giving it a legal identity that's distinct from the identity of its owner. In addition, incorporation allows a company to sustain itself through periods of leadership turnover. Steve Jobs was once booted out of the company he started. This couldn't happen if he operated his computer business without a corporate structure.
A more schooled tax attorney or corporate lawyer might also explain the tax advantages of incorporation. Business owners like David Green benefit immensely from the ability to pass money through places like Hobby Lobby.
What is the point of this exercise? It's to point out two very important things. First, laws surrounding incorporation are designed specifically to separate the business owner as a legal entity from the business as a legal entity. Second, these laws are in place mostly for the benefit of the business owner. David Green is willing to avail himself to the standard protections of the corporate legal structure though he is unwilling to comply with the other requirements of operating a business.
When it comes time for the latest slip and fall plaintiff to file his lawsuit, he cannot pierce the corporate veil to get to David Green personally. If the time comes when an unsecured creditor wants to make a claim against Green in lieu of his bankrupt business, Green will hide like a matador behind his crimson red veil. The legal distinction between business owner and incorporated business is fine by Green when it cuts in his favor to provide a shield for his personal wealth. When it comes to his company complying with federal law to provide contraception to employees, though, Green sheds the veil, arguing for a sort of perverse legal intercourse between business and business owner.
This is the petulant operation of a pariah who wants more than just to have his cake and eat it, too. He also wants a well-maintained waist line when he gets done with that cake. Green and business owners like him take full advantage of the ability to participate in a diverse, secular, and regulated marketplace. They succeed for a number of reasons, including savvy ownership, strong fiscal fundamentals, and creative ideas. But they also succeed because of the protections offered by the structure of the business world. Is there any question that David Green would cease to run 500 craft stores if every slip and fall could mean a lawsuit that he would have to personally appear for? If this man continues to take full advantage of the corporate structure which draws a distinct legal separation between him and his business, then he must recognize the severance between his own religious beliefs and the religious "beliefs" of his company. Green must come to understand that his company lacks the spiritual soul that he believes in, and as a result, it's not bound by the religious obligations of his Bible and it's not going to be judged by the gatekeepers of either heaven or hell.
And as I wrote before - if he's uncomfortable with this truth, then he has a very real option. He can take his ball and go home. If his religious "morality" overruns his greed, then maybe he should choose to run no business at all. Or perhaps he should run a business that's not incorporated, where his religion can mate with his business but his riches would be fair game for potential claimants? I've read the Bible, and Jesus told people like David Green that following heavenly commands wouldn't be easy.
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By Ferry Groenendijk: He is the founder and editor of Video Games Blogger. He loved gaming from the moment he got a Nintendo with Super Mario Bros. on his 8th birthday. Learn more about him here and connect with him on Twitter, Facebook and at Google+.
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