When choosing a business structure, it is important to consider how it can impact personal assets. As the owner of an LLC, you are a member and if your company has to pay legal fees or settlements, you do not have to open up your personal bank account.
LLCs are their own entity
The IRS considers an LLC to be its own entity. When you pay business taxes, they come from the company. Generally, limited liability companies can have as many members as they deem necessary. You can also own other companies under your business’s name.
Lawsuits happen to good companies
Sometimes people or companies who file claims against companies do so for malicious reasons. Additionally, you could go to trial and the court could mistakenly find you or your officers liable for various violations. Facing business litigation does not mean that you caused any harm, but it does mean that you have to fight those allegations in order to preserve your company.
When you have an LLC, you can feel more comfortable handling high-stakes business litigation. You worry less about your home, your vehicles and your family’s stability because you have limited personal liability. and can focus on the trial going forward. You can focus on a favorable settlement that will not break your company and will not touch your personal assets.
