If you own rental property or a business in your own name, be aware: if you are sued by an injured renter or customer, almost all of your assets–including your own home and retirement funds–could be lost in the lawsuit. Therefore, many owners of small businesses or rental properties form a Limited Liability Company (“LLC” for short) for asset protection.
A Limited Liability Company is a good option. It can isolate business or rental property liabilities to the LLC’s assets only, thereby protecting your other assets. An LLC can also help clarify management responsibilities, set out voting and other rights, and provide ground rules for ownership transfers. It is simple to form an LLC, but there is a catch. The liability limitation only works if you treat the LLC like a “real” company. For this, formal written documents, regular minutes, and separate accounts are crucial.
If you would like to learn more about the pros and cons of forming and running an LLC, contact Rehberg Law Group at 206-246-8772.