Understanding an LLC and its asset protection strengths

| Mar 29, 2021 | Business Law

The type of business structure you choose plays a crucial factor in the future of your company as well as your future by protecting your personal assets. One such business structure that proves advantageous to business owners is a limited liability company (LLC). When you form an LLC, your personal assets are protected from any business-related liability.

It takes a simple three-step approach in forming an LLC. Select a name for the LLC, file articles of organization in your state of residence with the Secretary of State’s office and pay the necessary fees. Those moves can protect you from any personal liabilities stemming from company-related debts. Make sure to this at the beginning of your business’s formation. This is a necessary and, sometimes, overlooked step.

Your home and investments protected

The business world is filled with complications, distractions and tedious everyday activities that must be confronted and overcome. When dealing with these situations, a business owner understands that an LLC serves as an ally or more of a safeguard that protects you from financial harm.

For example, if another company or a person files a lawsuit against your company or if your business files for bankruptcy, your personal assets are protected. Creditors and others cannot seize your home, motor vehicle and investments. The only at-risk assets are the ones that are part of the LLC.

Advantages of a Nevada LLC

And there are bonus advantages when owners and investors file for an LLC in Nevada compared with most other states. A Nevada LLC provides many statewide-level benefits.

Along with numerous tax-related advantages such as no corporate income tax, no personal income tax and no estate tax, a Nevada LLC also provides a business owner with a higher level of privacy. For example, an owner’s name is not required in filing with the state. Another advantage of a Nevada LLC: investors do not have to file and include a list of company assets.

The benefits of having an LLC as your business’s structure go beyond asset protection. However, personal asset protection remains at the foundation.