If you’re a small business owner, or thinking about starting a small business, you’ve probably heard the term “limited liability company” or LLC. In a nutshell, an LLC protects a business owner from being personally liable for business obligations or debts. Creditors cannot go after your home, bank accounts, or other assets. LLCs also protect your personal property from your business partners’ or employees’ actions.
There are limits to an LLC’s protection, however. Attorney Jane Haskins writes on Legal Zoom, ” You will still be personally liable if someone sues you for your own negligence or wrongdoing—even if the accusations are related to your business. An LLC does not protect your assets if you personally guarantee a contract or loan.” Because of this, she warns that LLCs should not be your first or only line of defense against legal action. She advises business owners to also buy insurance to protect their business.
LLC’s are also less complicated to run than other types of companies, such as corporations. As legal website Nolo.com explains, “An LLC is the simplest business entity to form and operate. Unlike with a corporation, it is not necessary to have officers and directors, board or shareholder meetings, or the other administrative burdens that come with having a corporation.”
Keep in mind, not everyone can form an LLC. Depending on the state, some professionals, such as doctors, attorneys or accountants, are not allowed to form LLCs. There are other options if you fall into that category, including forming a professional limited liability company or a professional limited liability partnership.
While LLCs can be confusing, they can be a great tool for your business. We don’t give legal advice at VersaTel Solutions, so you’ll have to determine if an LLC is right for you. But, we can work with you to find ways to make your business run smoothly. From bookkeeping to Process Management, we can help your small business succeed. Reach out to us to find out how.