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    4 Replies Latest reply on Oct 7, 2009 12:21 AM by IntConsultant

    How does LLC Protect owner of business?

    mythrilwolf Newbie
      I've been told that an LLC is a good option for small businesses because it protects the owner of the business from liability if the business gets sued.

      How does that work exactly? How does an LLC protect the owner? What if the owner loses a lawsuit and has to have the business pay more money than it has? Wouldnt the debt drain what the business has and then ultimately fall into the owners hands anyways to finish the payments?

      And what other ways would an LLC protect the business owner?

      Thanks for any help you can give me.
        • Re: How does LLC Protect owner of business?
          LUCKIEST Guide
          How does LLC Protect owner of business??

          Who are you?? Go to Members page and share some info.

          How does LLC Protect owner of business. As the name implies, it provides limited liability for the owners.

          Talk to your lawyer
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          • Re: How does LLC Protect owner of business?
            bm911tax Adventurer

            You are asking good questions. Many people just automatically think once they have limited liability they can do whatever the want, WRONG.


            Many States pay close attention to LLC with a single member and in few cases the owner of SMLLC was still liable for debts and obligations of LLC. So it depends on the state/judge. The LLC provides more protections to multi member. You still need to have a liability insurance and good lawyer. In a nutshell; with true LLC structure, LLC can declare bankruptcy and the members of the LLC will not be personally liable for the debts and obligations of LLC.


            Hope this is answers your questions.



            • Re: How does LLC Protect owner of business?
              cutcomp Wayfarer
              The idea of an LLC is that it provides the same kind of shield that a corporation does, but is structured as a partnership for tax purposes. So the debts and liabilities of the LLC company do not pass along to the "members" of the LLC. As someone else has pointed out, though, there are limits to this protection. For debts of the company, you might be asked to personally guarantee loans, thus bypassing the shield provided by LLC status. Also, if you provide professional services (such as a consultant) the LLC format won't shield you from professional liability created by your consulting work.

              Still, the LLC format is a very useful one for small business, I think (I use it myself.)
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              • Re: How does LLC Protect owner of business?
                IntConsultant Newbie

                You can also call the IRS and request to change your status as a single member. You can file form 1040A at the end of the year for your business but get the Liability procteccion of an LLC.

                ALSO, I found a very powerfull site, to learn how to better market your product and services. Get more information at the site below.


                Hope this help with your question!