Entrepreneurs often start out as freelancers or sole proprietors. But for many, there comes a time when those kinds of business structures just don’t work anymore. Every businessperson in Pennsylvania should know a bit about limited liability companies and how they work. LLCs can act as a great form of protection from certain kinds of lawsuits.
A limited liability company is just what it sounds like. It limits the personal liability of owners or officers of the company. Basically, this means that creditors or workplace accident victims can’t go after the personal assets of officers for the company. This means the residence, car and other property of a business owner is protected. They can’t lose these personal assets due to a work-related lawsuit or debt.
Most kinds of businesses can set up as an LLC. However, a few are barred from using that kind of classification. Banks and insurance companies are two examples of these restrictions. The Pennsylvania secretary of state will have information about others. Another good resource for entrepreneurs curious about LLCs is the IRS.
In most states, limited liability company is a very flexible classification. For example, they can be set up by one owner, by a partnership or even another LLC. Foreign companies can set up LLC businesses in the United States, too.
While LLCs exist across the country, the rules governing them are set by individual states. That’s why it’s a good idea for people in Pennsylvania to get advice from a competent business law attorney before setting one up. A local business law firm understands all the ins and outs of LLC formation for the state. That’s something they do every day.