Do you have an LLC? Take steps to avoid personal liability.
Most people form a limited liability Company to shield their personal assets from liability and debts of the LLC. Did you realize that most single member LLC’s are at risk to pierce the corporate veil? You can avoid that outcome by taking certain steps. These small steps if done right can be very beneficial in avoiding liability that you never intended to take on but can be devastating for any business, particularly for a small business owner.
The key is to maintain a separate identity from the LLC. One easy step is to draft an operating agreement which would indicate that you individually have a separate identity from that of the LLC. If there are more than two members in an LLC, it is further advantageous as it puts your understanding in writing. In the beginning everybody is happy and often they don’t feel there is a need for a written agreement, or that they will “work it out” or they are just too busy to negotiate and memorialize their understanding into a written agreement. Whatever the case maybe, remember it always cost less in time and money to resolve the issues upfront than at the back end of it. Litigation is expensive. Get an attorney familiar with the issues to walk you through the process and avoid a lot of headache and heartache later. Moreover additional provisions can be included in the LLC operating agreement to confirm your status as separate and apart from that of the LLC. Also maintaining separate books and records for your personal finances from that of the LLC is an important factor.
Feel free to call us to discuss your matter in greater detail at (516) 570-4016.