Limited Liability Company : Small Business Entrepreneurs Run for Cover
by Melissa Gordon
In the uncertain economic times we are currently experiencing
everyone is hoping to find a place of safety and security to
weather the storm. While unscrupulous people will try to conjure
ways to take financial advantage of those who are controlled by
fear, keeping a cool head can be your best technique for
recognizing opportunities to move your business to a high and
dry place.
If your current plan is to operate your business as a
sole-proprietor or partnership entity, simply restructuring it
as a Limited Liability Company (LLC) under state statutes can
offer you a level of personal liability protection against an
economic downturn.
Your personal assets are not subject to seizure in the event the
business defaults on its loans or is required to file
bankruptcy. This is because an LLC is a completely separate
legal entity from its owners in much the same way that a
corporation is a separate legal entity from its stockholders.
The legal obligations of the company do not transfer to its
owners if the company is unable to fulfill them. Aside from the
volatility of the business environment, we live in a society
that is quick to play the victim card. Litigation brought by
disgruntled employees or customers is a real possibility for any
business.
While it is prudent for insurance coverage to be in place to
protect the business against such actions, no amount of coverage
can ensure that the litigator will not go after the owner as
well. Structuring your business as an LLC will remove the
possibility of this threat. Should the company be required to
issue a financial settlement, the owner’s house, investments,
and personal property are protected against liquidation to
assist in meeting the obligation.
While the primary benefit received from structuring your
business as a Limited Liability Company is the peace of mind
that comes from knowing your family homestead and other assets
are off the negotiation table, it is not the only one. The
perceived stability and professionalism of your business will be
enhanced when you take the extra steps to investigate your
state’s requirements for establishing an LLC.
Potential employees, customers, vendors and lending institutions
will have added confidence in your service or product and the
long-term viability of your business when you formalize its
legal structure. A business name followed by Limited Liability
Company or LLC projects a serious, well-planned business with
serious, savvy business owners. It supports the kind of image a
successful enterprise strives to consistently convey in its
efforts to outshine its competitors and attract enthusiastic
customers and quality people into the organization.
The Limited Liability Company protection umbrella will not only
assist you in being prepared for the worst, it will keep you
sheltered and looking your best before, during and after the
economic rainy season.
Disclaimer: This article is for informational and entertainment
purposes only, and should not be construed as legal advice on
any subject matter.
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