One of the main reasons people create (LLC) or Limited Liability Corporations is to fear the business failing. If legal action arises, you as a person will be protected. Litigation would be aimed towards only the industry itself. You create an LLC to protect against litigation, and the company will be litigated against rather than the person. In the event of a lawsuit, the company is expected to compensate not the owner or executive. Creating an LLC is creating a separate entity that shields you from legal claims, so what can an LLC not protect you?
Incorrect Filing of the Necessary Paperwork
A significant part of owning a business and creating an LLC for that business involves both naming an agent, which is whom it says is on the paperwork, and receives first notice to any litigation matters that come forth (usually we suggest using your legal counsel here) and the necessary paperwork it takes when filing with the state (this requires extreme diligence, and we also would recommend this being handled by way of a law firm). You also will be required to file taxes on behalf of your newly formed LLC. Companies that slack and fall behind on the corporation’s documents and do not keep them up to date involving the registered agent side of things offer fewer protections for owners and executives than those of corporations that do not have a for lack of a better term a “legal umbrella” to make sure you are compliant with all regulatory requirements through the state.
Separating Your Finances Correctly
At the early stages of starting your first company, it is crucial to differentiate your personal assets from your business assets as a slew of problems and road bumps that could arise in the future. Commingling a personal bank account to pay for business expenses is one of the don’ts that you want to avoid because it makes it easier for litigants to bring a claim and basically hold you and your business accountable for losses only related to the company. Having your personal assets wholly separated away from your business, even down to the cards and bank accounts you use, is only one of the ways a law firm can improve your protection to your LLC.
Getting help with business formation and ensuring you are in compliance with the necessary paperwork and filing will only improve the protection and shielding of your business. Contacting the professional Business Formation Lawyers at Enara Law PLLC should be a priority when deciding to form your business or to protect any idea you may have in the future. Enara Law can guide you through the legal process of forming corporations. They have the wherewithal and experience to protect you effectively before you make the mistake of starting a business on your own.