Just how limited is liability for a LLC?

By definition, an LLC is supposed to protect members of a company from being held legally responsible for debts or other liabilities. Of course, you have to play by the rules for this to actually work.You have to keep funds separate, never mix personal finances and business finances, and keep as detailed record as possible.

Keep in mind that any assets that are considered company possession are up for grabs should the company be successfully sued. Such assets may include:

  • Real estate owned by the company
  • Any produced but unsold goods
  • Investments made with company funds
  • Any equipment used for company purposes

If you have in any way mixed business with personal finance (and trust me, this will be evaluated with a fine tooth comb should you ever get sued) then you could personally be held responsible for repaying company debts as a result of litigation.

LLCs are a great way to financially separate yourself from your business, but you should make sure that you aren’t crossing any lines with your finances. If you need some help, take a look at our website at LawTrades. We can put you in touch with an attorney who specializes in LLCs so you can get the guidance and support that you need.