Most businesses transform their business or start an LLC to take advantage of the Limited Liability.  When a business operates as a Limited Liability Corporation, the law provides its members/owners protection from individual liability from the actions of its employees or other members.

For example, an employee of the is delivering a product to a customer and while delivering the product, the employee is in an accident.  If the LLC is properly formed, its members/owners are protected from individual liability form the actions of the employees.  If the company is sued due to the actions of the employee and opposing side is successful in their lawsuit, the judgment awarded against the company must be satisfied by the company’s assets.

As mentioned, the LLC will provide protection against the actual members/owners from being personally liable for the judgment.  It is important that the LLC is formed correctly and operated correctly.  If the LLC is not formed properly or if the members/owners do not run the LLC properly, the members/owners may be liable for the judgments as well.

There are numerous factors to consider when forming a LLC and operating a LLC to ensure the members/owners are protected.  There are also tax consequences for each structure.