Does an LLC protect its owners personal assets against liability?

UPDATED: Oct 1, 2022

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Does an LLC protect its owners personal assets against liability?

It is a newly opened LLC, no corporate agreement yet, no assets, no returns, has liability insurance, is named in a liability lawsuit. Does the LLC protect its owners and their personal assets in case the suing party will go after the owners of the LLC? Should this LLC be keept open or to close it?

Asked on July 1, 2019 under Business Law, Florida


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

The LLC will protect the owners from most liability: it protects them from being liable just because of their ownership of the business or management thereof. It does not protect from liability against them due to their own personal actions or negligence, which could be asserted against them regardless of the LLC. Examples: the LLC has an employee; the employee has a car accident on the job; the owners cannot be personally sued for the employee's accident even though they own the company he was driving for. But if an owner was driving for the company and ran into someone, that owner (but not his/her co-owners) could be sued since he or she was the negligent driver, and negligent drivers can always be sued.
If the LLC is being sued, keep it open; it can be taken as a fraudulent (to the plaintiff or person suing) act to shut down an LLC that is being sued, since it deprives them of course against the LLC. Such an act fraudulent toa  potential creditor (in this case, a "judgment creditor") can deprive you of the LLC's protection, since the law does not let LLCs be used to defraud people whom you owe money.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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