Creating a limited liability company (LLC) can be highly beneficial for a Florida small business owner. This business structure provides members with business ownership rights while minimizing their personal liability. However, while it’s true that forming an LLC can help members protect their non-business assets, that does not mean there won’t be lawsuits. The majority of businesses are sued at some point during their life span. Therefore, if you are a member or manager of an LLC, you need to know: Is your Florida LLC at risk of being sued?
What is a Limited Liability Company?
A limited liability company (LLC) is a business entity form that allows a business the be owned by members (shareholders). The LLC members may or may not be managers of the organization. LLC members are not required to keep records or meet in the same manner as corporate shareholders.
LLC Benefits
One of the primary benefits of forming an LLC is that members are not personally liable for the actions of the entity or other members. LLCs are also protected from individual members’ creditor claims. This type of business entity also enjoys certain tax treatment benefits.
Is My LLC at Risk of Being Sued?
Having an LLC can be an excellent way to form and operate your business. However, having this business structure does not mean you are completely insulated from lawsuits. Fortunately, by planning ahead, you can take steps to help protect your LLC and minimize the risk of being sued. Here are some of the areas you should consider:
Not Mixing Business and Personal Interests
Being a member of an LLC generally means you can’t be held personally liable for the actions of the company and other members. However, it could be hard to differentiate the two if you use the same accounts to pay business and personal expenses. Therefore, the best practice is to separate your personal and LLC-related finances. Otherwise, a litigant or creditor may be able to claim a member’s personal assets are part of the LLC.
Being Properly Insured
Operating a Florida business generally requires some insurance. Having the appropriate amount and type of insurance can help you protect the LLC. These policies can cover a myriad of claims and may help prevent lawsuits.
Record-Keeping
Keeping consistent and accurate records is an important part of operating a business. Additionally, these records can also help owners resolve disputes. For instance, suppose a vendor claims the LLC owes a certain amount for delivered goods, and you have an inventory record that shows that only half of your order arrived. Being able to demonstrate how you recorded this information may help the LLC resolve the dispute before litigation ensues. Additionally, Florida law requires that LLCs retain copies of their annual or biennial reports, operating agreements, and certificate of formation. Keeping these mandatory documents current can help protect the LLC’s interest.
Having Small Business Counsel
One of the best ways to help protect your LLC from being sued is by working with an experienced small business attorney. Your business counsel can help you evaluate multiple aspects of your LLC and identify the most beneficial steps to take to protect the company and its interests. Having the advice of an experienced Florida business owner at every stage of your endeavor is essential to its success.
If you are considering forming a Florida LLC, it’s crucial that you make decisions that will help protect you and your business from lawsuits as early as possible. At the Florida Small Business Center, we help our clients protect their LLC interests. If you have questions about protecting your LLC or other Florida entity, please contact us today to schedule an appointment.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.