One of the most important reasons for forming an LLC or corporation to run your business is LIABILITY PROTECTION.
I don't need to tell you that a growing lawsuit epidemic is going on in the United States and it only appears to be getting worse. Statistics reveal that 1000's of lawsuits are being filed each week and small business owners are prime targets. It may be a disgruntled former employee . . . a customer . . . a business competitor . . . a total stranger . . . some government agency . . . the list goes on.
One expert said your chances of being sued are higher than your chances of going to the hospital this year? I think that may be a bit of an exaggeration . . . but I do know that more lawsuits are being filed all the time . . . and starting a business only increases your risk.
Don't get me wrong. I love small businesses. They are great . . . they help make dreams come true for many people and they can be your path to financial freedom, independence and success. They are the back bone of our society and one of the main supports of our national economy. My father was a small business owner all of my growing up years. I am absolutely in favor of small businesses.
But, small business owners need to protect themselves. Operating your business through a properly formed and maintained entity like an LLC is the single most important step you can make to protect yourself.
The LLC entity was specifically created by law to provide a layer of protection between the business and its individual owners. With our lawsuit crazed society, the number of LLCs being formed has grown by over 90% in the past few years. The main reason is protection.
The best way to reduce the risks to small business owners is through intelligent business planning. Many new business owners think that lawsuits and personal loss will never happen to them. Please don't make that mistake. Once a lawsuit is filed, it's almost always too late to start thinking about forming an LLC . . . because liability starts when the injury occurs and forming an LLC is not retroactive. You can't go back and say . . . I should have done it.
You have to fully organize your LLC and then operate it properly in order to maintain liability protection. If you don't, then you may lose the very protection you were trying to get by setting up an LLC in the first place.
If you are going to start a business, it's crucial that you take the necessary steps to protect yourself right up front or as soon as possible. If you haven?t done it yet, don't delay or procrastinate.
Wise business planning includes the formation of the proper business entity and the purchase of liability or business risk insurance when available. You cannot eliminate every possible risk when starting a business but you can substantially reduce the likelihood of a devastating lawsuit through proper planning.
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don't run any business without using an LLC by Attorney Bob Montgomery Form Your Own LLC, and Form Your Own LLC
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