Don’t Risk Losing Personal Liability Protection for Your LLC

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Limited Liability Companies (LLC) are vast becoming the business entity of choice for many new business owners in Texas.  From its inception, nearly 25 years ago, the LLC offers tax benefits as well as personal protection for its members.  This means that members are not personally liable for debts and often court judgments incurred by the LLC.  LLC members are shielded and creditors cannot get to their personal assets.

What many members fail to realize is that there are policies and procedures that govern how an LLC must be set-up and operated in order for the shield to remain in place.

When setting up an LLC, members should seek legal advice to insure the LLC is properly formed.  It is equally important that the LLC be adequately funded at the onset.  There should be enough capital to operate and carry out the day-to-day operations of the business.

Once the LLC is funded, always maintain a separate bank account and keep the accounting records organized and up-to-date.  Never commingle personal assets with those of the LLC

When dealing with individuals and other businesses, make sure everyone is put on notice that they are dealing with the LLC and not the member personally.

Remember, when an LLC is formed, it becomes its own entity and the member(s) of the LLC wears two hats; one as the individual and one as the LLC representative.  The lines should never be blurred and there should never be a question as to which hat the member is wearing when dealing with outsiders.


The above is provided for informational purposes only and is not, nor should it be construed as, legal advice.


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