Does a LLC start protecting your personal assets as soon as all the steps required to create the LLC are completed?

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Does a LLC start protecting your personal assets as soon as all the steps required to create the LLC are completed?

Asked on September 10, 2018 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It protects from liability incurred through or because of the LLC *from the moment it is created forward*. It does not have retroactive effect. Example: you create an LLC for a catering business you are creating. The LLC signs a contract the day it is created and then defaults on it--your personal assets are protected. But if YOU signed the contract prior to creating the LLC and default, the LLC offers you no protection, since it did not exist when you took on the contractual obligation.


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