Hamilton Law Blog

Protecting Your Personal Assets Through An LLC

Posted by Philip E. Hamilton, Esq. | Jun 01, 2022 | 0 Comments

When you form a company, you should meet with a business law attorney to discuss your different choices for entities. The purpose of doing so is to ensure your personal assets remain separate from your business assets. For example, imagine that someone opens a bookstore without forming a Limited Liability Corporation (LLC). (This is not your only choice for an entity, but we will be focusing on LLCs because of how common they are and how applicable they can be for small business owners.)

If the bookstore is forced to close while the owner still has unpaid debts, their personal assets could be at risk. Although an LLC's protection is not absolute, it can prevent a business owner from losing their personal assets because of a debt or judgment connected to their business.

How It Benefits You

When you and your create establish your business as an LLC, the LLC is only liable to pay the debts and obligations of the business. There needs to be a legal line between you and your business. When you don't guarantee that you will pay the business's debts through a contract or otherwise, you will not be personally liable for the business's debts.

That line can be broken. This is also why speaking with a business law attorney during this process is crucial. They will ensure the LLC is created appropriately, and they will also be able to advise you on challenges you may face during this time. For example, what happens when your lender wants you to personally guarantee the debt will be repaid? In other words, the lender will first go after all the LLC's assets to recoup the loan. If those assets fall short of the LLC's debts, then the lender wants you to ensure you will make up the difference. Before committing or guaranteeing something, you should seek the counsel of a business attorney.


LLCs could protect you from being personally liable if you did not engage in any wrongdoing. Imagine that you own an LLC that makes blankets and ships them to retailers. Each box you send out contains 20 blankets. A group of employees have been removing one blanket from each shipment and selling it to someone else. A retailer discovers they have been paying for 20 but haven't received full shipments. As the owner, you would only be personally liable if you had participated, knew about, or condoned what your employees were doing.

Hamilton Law, PLC

Hamilton Law, PLC proudly works with and supports entrepreneurs, start-ups, and other business owners in selecting and forming business entities. Contact us today and schedule a consultation. We can have a conversation about which entity fits your needs so you can successfully limit your personal liability.

About the Author


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment