Asset Protection through LLCs
Getting Asset Protection through LLCs
It has been just about ten years since we experienced one of the most challenging economic periods we have seen since the depression of the early part of the 20th century. As a result of that experience, there were many individuals and businesses that suffered serious losses, some even to the point where they have not yet fully recovered. There were a lot of businesses that could not endure and ended up having to close down for good, while countless individuals and families ended up losing their homes along with other vital assets. Since that time, the economy has improved tremendously, and the majority of us made it through with some very valuable lessons about how to protect ourselves financially from such situations.
One of the more important lessons coming out of that rough period has been learning the great importance of having certain measures in place to protect their assets from being taken away. Until then, there was a surprising number of people who were not even clear on the distinction between what assets are and what liabilities are. Even in those cases where they did understand that a home or property is considered an asset, they still did not know that other things like cars are considered liabilities, as they generally lose their value over time. With a firmer grasp of what assets really are, many of us have been able to learn more about what steps we can take to both protect the assets we currently have, as well as increase the numbers of assets we have.
Of the various strategies that people can use to protect assets, the method of forming a limited liability company, or LLC, is one that has gained a lot of popularity recently. With our technologies continuously advancing, along with the immense expansion of global online markets, many people have been inspired to form their own businesses. Especially since the vast majority of these are small businesses, if not essentially owned and operated by a single person, they have learned that establishing their businesses as LLCs is one of the best ways to ensure asset protection of their personal assets, should anything go wrong. If they do not have the protection of the LLC, it is then possible for them to lose both their personal and their business assets if someone were to file and win a lawsuit against them.
Forming your business as an LLC affords you many of the same benefits and protections that corporations get, but with much less paperwork bureaucracy and with fewer personal risks. Again, the key factor here is that a standard corporation can be handed a judgment in a lawsuit which could then place your personal assets at risk of being taken away. An LLC, on the other hand, provides greater assurance that your personal and business assets are not counted together. Because of this, your personal assets should remain protected, even if your business assets happen to be taken away.
For anyone that has enough discipline and will to form their own business, this is actually a pretty great time to do so. Learning from our past economic struggles, people have learned the great financial security of forming their businesses as LLCs. Know the LLC advantages and disadvantages here!