Originally Posted by alexschultz1
Um, yes it does, but to an extent. An LLC (limited liability company) won't protect you if you run someone over with your mower, but it will protect you if you underbid a $250,000 job and need to declare bankruptcy. I have no idea why people think that an LLC instantly protects your personal assets from legal situations that you are personally responsible for.
Originally Posted by Sonshines
Thanks everyone for your input. All opinions are valued. I have had some (including the Sec. of State) suggest I ask our accountant. Since it is just hubby and I just getting started (lawn mower/whacker with plans to get a few more items), we are our own accountant. Today, we sent in our M/O to Sec. of State for our legit business name, and should things take off and need the LLC, we will go that direction. For now, being so small, hubby will be talking to our insurance company on other options.
The first post I quoted is spot on. An LLC does personally protect you somewhat. When you're at the point that you have employees if they run someone over on the mower, with an LLC the person can sue the employee and they can sue the business (if the person violated a business policy you're kind of safe but lets pretend you're not). As long as you didn't personally tell your employee to run that person over your personal assets are safe. Had you told the employee it's ok to run people over then your personal assets are up for grabs when you personally are named in the suit. If it's just you and hubby no matter what the incident is your personal assets will be up for grabs.
The other thing that was mentioned in this thread is credit and bankruptcy. With a DBA if you use credit and the business goes bankrupt your personal assets are up for grabs. An LLC will protect a portion of your personal assets from that claim.
As always a CPA familiar with local laws and taxes is the best to answer this question but in general a family business with no debt there is no reason for an LLC. Once you start hiring employees or using credit some sort of separation (LLC or corp) will protect your personal assets.
The post mentioning employee meetings with minutes etc only applies to corporations to the best of my knowledge.