Limited Liability Companies For Dummies, 3rd Edition

Chapter 20

Ten Ways to Keep Your Liability Protection Intact

IN THIS CHAPTER

Keeping all the paperwork in order

Watching where the money goes (and comes from)

Now, really, what is the point of a limited liability company without the limited liability part? Without limited liability, it’s no better than an expensive sole proprietorship — no special protections, no special tax treatment, no ability to issue shares of ownership. If you don’t take the simple steps necessary to keep your limited liability intact, you may as well save yourself the filing fee for creating your LLC and be prepared to kiss your hard-earned personal assets goodbye if you’re sued.

Before you even think about taking extra steps to protect your limited liability, I ask you to do one thing: Be on your best behavior. No, I don’t mean keep your elbows off the dinner table and say “please” and “thank you.” I mean don’t lie, cheat, or steal in the name of your LLC. Wrongful misconduct on the part of a member is the easiest way for your LLC’s veil of limited liability to be pierced. Don’t think that your company will protect you from purposeful fraud that you initiate.

File the LLC Properly

The first step to obtaining ...