Should your business be an LLC?

Should your business be an LLC?

What is an LLC?

Being sued is scary. In the event that you are found liable for damages to someone, you could be ordered to pay money to compensate for the damage those wrongful actions caused and, in some circumstances, you could be ordered to pay additional money as punishment. This could create devastating results for your business that could even lead to filing bankruptcy.

If you are a business owner, you have several things to think about. The consequences of your wrongful actions can extend to your personal life if you don’t take preventative measures. In Arkansas, forming a legal entity such as an LLC, a limited liability company, is something that you want to consider. An LLC is a business structure that helps to protect the liability of the business owner. Under normal circumstances, an LLC protects the owner’s personal assets from the creditor or any legal involvement. It also protects the business if the owner is found personally negligent.

Recently, Arkansas adopted the Uniform Protected Series Act, known as the series LLC, which is a bit more complicated. This allows business owners to protect assets in separate divisions within a single series. An example of this would include rental houses, which would allow protection of one property from another. The new law in Arkansas went into effect on October 1, 2019.

Whether you decide on forming an LLC or different entity type, it is important to discuss your options and settle on the right entity type with the help of a licensed attorney in the appropriate legal jurisdiction.

It is always good to be proactive instead of reactive, and that goes for entrepreneurship, as well. The survival of your business may depend upon it.