Do I Need an LLC and Why Can't I Set It Up Myself?
Imagine working for years to make your business successful. You’ve been daydreaming about going on that fabulous vacation or putting your kid through college and you are close to realizing your dream. One day, an employee of yours causes an accident that is not covered by insurance. If you haven’t set up a Limited Liability Company (LLC) or other limited liability entity, costs from the accident and any debts incurred will become your personal liability. The money you’ve been saving to make that dream a reality might end up in the hands of your company’s creditors. You can easily avoid this nightmare scenario by having a business law attorney set up an LLC for your business.
An LLC is formed by filing a Certificate of Organization with the Secretary of State’s office, along with adhering to other statutory requirements. An LLC works as a shield for your personal assets like your home or retirement account from creditors of the LLC. Your personal assets cannot be seized to satisfy judgments against your LLC and cannot be used to satisfy the LLC’s debts unless you’ve agreed to personally guarantee the LLC’s debts. Once the LLC is created, and if you take the right steps, you are safe from personal liability. The LLC designation also helps add legitimacy to your business. A qualified business law attorney can help make this process easier, so you don’t miss anything.
A question business law attorneys hear frequently is “Why shouldn’t I set up the LLC myself? There are websites where I can download forms.” The answer is, if you do so, and the LLC is set up incorrectly or if you fail to follow the requirements of Nebraska law, your LLC may be administratively dissolved. If your LLC is dissolved (even if you don’t know it), your personal assets are at risk because you no longer have the protections the LLC provides. Further, setting it up correctly will likely cost less than fixing a mistake. Mistakes are easily made without the experience a qualified business law attorney brings to the table.
An LLC will be governed by an “Operating Agreement.” Among other things, this document determines what rights you have, what obligations you owe to other members of the LLC, and whether your LLC will be “Member Managed” or “Manager Managed.” Without the expertise of a business law attorney, the Operating Agreement may not match your expectations. Should the day come when you have a dispute with your business partner, you may end up spending thousands of dollars in legal fees because the Operating Agreement wasn’t drafted carefully to match your intent when issues arise or you’re ready to leave the business.
If you’re starting a new business or have been running a current business without an LLC or other limited liability entity, there are steps you can take to ensure the protection of your personal assets. Let the business law attorneys at Carlson & Burnett answer your questions about LLCs and if warranted, guide you through the process of setting up an LLC so that you can avoid any pitfalls. Give us a call today at (402) 810-8611.