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Inc or LLC protections


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Here is a great post from member lew. I have taken the liberty of re-posting it here for a better view.

Thanks lew!



I have been researching the differences of Incorporating and forming an LLC. In the future I may Incorporate or become an LLC but for now I carry the liability insurance. Trying to keep it simple as possible then expand as needed. I came across this article that might answer your question on being sued even though you incorporate or form an LLC. This is a direct quote from the site that I am performing my researching. I would seek professional guidance before making a decision. Here is the link if anyone is interested in reading about Incorporating or forming an LLC. 


Exceptions to Limited Liability

While LLC owners enjoy limited personal liability for many of their business transactions, this protection is not absolute. This drawback is not unique to LLCs, however -- the same exceptions apply to corporations. An LLC owner can be held personally liable if he or she:

  • personally and directly injures someone
  • personally guarantees a bank loan or a business debt on which the LLC defaults
  • fails to deposit taxes withheld from employees' wages
  • intentionally does something fraudulent, illegal, or reckless that causes harm to the company or to someone else, or
  • treats the LLC as an extension of his or her personal affairs, rather than as a separate legal entity.
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