How does an LLC protect me from lawsuits?


There are several articles on this site on the concept of limited liability.

What an LLC does is it creates a wall between the liabilities of your company, and your own personal assets.

If someone gets a judgment against XYZ, LLC, they can only go after the bank account, property, etc. of XYZ, LLC. They cannot go after the bank accounts or property of XYZ, LLC’s owners.

So while forming an LLC won’t stop someone from suing your company, what it will do if properly structured is ensure that they can only sue your company, and not you personally.

There are exceptions to this concept, called piercing the corporate veil, which is there to prevent fraudulent use of corporations. There are a couple pages on this site about veil piercing, and how to prevent it.

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