Is it true in busiess what is true in life about money? Its not what one earns, its what one saves. This sure does seem true for both personal finance, and business. Perhaps when applying this saying to the business world it should be amended to the following: "It is not just what you earn or what you save it is also how much liability you protect yourself." The moral of the story is that in today's world, there is always the possibility of a law suit. No comparison in law suits. Better the business than you personally.
This is why setting up a Limited Liability Corporation (LLC) is so important as it is a tremendous means of protecting your personal assets.Remember, if you are the Sole Proprietor of the business you are responsible for all actions and debts of company. At the end of the day, if something bad happens to your sole proprietorship, you alone are vulnerable.Since we live in a litigious society, protecting oneself with an LLC is important to say the least.
In the end, the LLC provides for most if not all of one's personal assets to be protected.This becomes a crucial consideration, to protect one's home and/or life's savings against a lawsuit.Generating wealth also means protecting what you already have.If a judgement is made, it is made against the LLC as the legal structure.
This does not mean that an LLC provides for permission to be negligent, as a company on the losing side of a lawsuit may find itself in bankruptcy or in other legal hot water.However, there is a big difference between personal bankruptcy and business bankruptcy. After all, the primary reason you are going into business is to amass wealth. So, why would you not seek a method of protecting your personal wealth?
Moreover, there are additional protections that an LLC provides for in addition to personal protection.As an example, an LLC is not a corporation, and therefore not eligible to pay corporate taxes. As you can see, placing your business activities in an LLC may well be beneficial.
