subject: Is A Limited Liability Company Enough For The Survival Of Your Business? [print this page] As you consider starting a business, one of the first decisions you will encounter is what type of business you will have. Some of the options are to have a sole proprietorship, a limited liability company (LLC) or a corporation?
Talking to several different people who already own a business in search of advice is a good idea. But you will likely get very different suggestions from each. Some will tell you to choose LLC while others favor a corporation in order to protect yourself. However, the thing is that filing for either of the two entities is simply not enough. Don't get me wrong, going for either an LLC or a corporation is a smart move. The problem is whether these two entities are enough to protect you from any liabilities.
A limited liability company can also offer more advantages over a corporation than just the limited liability it offers to the managing owner or members. One example for instance is that a LLC will give you the chance to avoid the dreaded double taxation that comes with owning a corporation and all the tedious paperwork and filing that comes with it.
But for those interested in the limited liability issue here is an example of how it can literally save your business: Say for instance you are an electrical contractor who happens to start building your own company. To protect yourself against any liabilities, you register your business as a corporation. Now, you have a lot of things to do and business is doing great. Unfortunately, out of negligence, you end up not doing your job properly and as a result you somehow manage to contribute to a fire in the house of your client, which is obviously one of the biggest liabilities for your business. Since you are registered as a corporation, you think that you are already protected from the lawsuit; but you are not.
As mentioned earlier, a corporation can protect you from liabilities, but in truth you are not protected from all liabilities, especially if negligence can be argued be a courtroom. This is the reason why LLCs or corporations are not enough to protect you from such liabilities. The missing puzzle piece here is liability insurance. If you have consulted the right people such as Chapter Group, then you will be able to get the right advice the first time.
Thankfully, this is just a hypothetical scenario. But that doesn't make any less dire the need to consult with a company that knows everything about business entities, and Chapter Group can give you the best suggestions regardless of your business.
