Will My LLC really protect me from lawsuits?
When helping clients form businesses, often I get asked: "Will my LLC really protect me from lawsuits?" Here's the truth nobody talks about. An LLC creates a legal wall between YOU and your business. But here's what most people get wrong: • They think it's bulletproof armor (it's not) • They assume it protects personal assets automatically • They believe registration alone is enough The reality? LLCs provide LIMITED Liability Protection. Key word = LIMITED. Here's what it actually does: ✅ Shields personal assets from business debts ✅ Protects you from partner's mistakes ✅ Separates business lawsuits from personal lawsuits But here's what it WON'T protect: ❌ Personal guarantees you signed ❌ Your own negligent actions ❌ Mixing personal/business finances The biggest mistake I see? People form an LLC then treat it like their personal piggy bank. They don’t keep good records of money flowing in and out of the LLC account. You MUST: • Keep separate bank accounts • Maintain proper records • Follow formalities • Never co-mingle funds Remember: An LLC isn't a magic lawsuit shield. It's a business structure that requires discipline. The protection is in the PROCESS, not just the paperwork.