Imagine one of your employees falls asleep at the wheel while driving a company vehicle. He causes a serious accident in a populated area. Not only are vehicles and property damaged, but there were several serious injuries. Yikes! As a Limited Liability Corporation (LLC), your entire business is at risk and can be held responsible for the cost of damages. Not good. But if you were not an LLC, the courts can look beyond the business, into your personal assets to repay those affected.
Limited Liability is essentially a hard line between your business assets and personal assets. Obviously, having limited liability is extremely valuable for you as a business owner. Unforeseen incidents happen and you want to make sure your personal assets are protected. It’s one thing to lose your business, another to lose your home along with it.
It’s important to note that in order to maintain limited liability protection, there must be a clear distinction between business and personal finances. This means maintaining a separate bank account for the business and not comingling funds.
If you’re looking for more financial help, visit https://www.nthdegreecpas.com/contact/