In recent years, more and more people have decided to become entrepreneurs and start small businesses. While this can certainly be an exciting and fulfilling endeavor, it's important to recognize that running a business also comes with legal risks that can put one's personal assets in jeopardy. If a business is sued or faces financial difficulties (which nearly always happens unexpectedly), the owner's personal assets, such as their home and savings, may be at risk of being seized to cover the debts of the business. This can be a major concern for small business owners, who often have the most to lose. As such, business owners need to take steps to protect themselves and their assets.
At Sumsion Business Law, we understand the importance of protecting our clients from legal liability. One of the simplest and most cost-effective ways to do this is by forming a limited liability company, or LLC.
An LLC is a business structure that combines a corporation's liability protection with a partnership's tax benefits. It is a separate legal entity from its owners, who are known as members. This means that the members of an LLC are not personally liable for the debts and obligations of the business. Such a legal separation is a significant advantage for business owners, as it protects their personal assets from being seized in the event that their business is sued or becomes financially insolvent.
...it's significant to note that LLCs do not provide complete protection from liability. Members can still be held personally responsible for their own actions in specific situations, such as if they are found to have acted negligently or fraudulently. In addition, LLCs can be held liable for certain types of taxes, such as payroll and self-employment taxes.
To ensure that your LLC provides the maximum liability protection, it's essential to comply with state and federal law by rigorously adhering to specific procedures that govern the formation and management of LLCs. This includes drafting and signing an operating agreement, which outlines the rights and responsibilities of the members and sets forth the internal rules of the LLC. It's also critical to follow proper corporate formalities, such as holding regular meetings and keeping accurate financial records.
...we have helped hundreds of clients form limited liability companies and assisted them in their operation, protecting them from liability in several ways. We facilitate the LLC formation process, including drafting and filing the required documents with the state. We review and advise on operating agreements to ensure that they are properly drafted and provide the necessary protections. We assist with ongoing compliance matters, such as holding annual meetings and maintaining accurate financial records. And we provide guidance on liability insurance and other risk management strategies.
Forming an LLC is one of the most effective ways to limit legal liability in business. By following proper formation and operation procedures, and by considering additional measures such as liability insurance, business owners can protect their personal assets and focus on growing their business. Our team of professionals at Sumsion Business Law is here to help clients navigate these complex legal issues and shield themselves from liability. Please call our office to schedule a consultation and learn more about how we can support you and your business.