If your business is to be sued, LLC protects your personal assets safe, which creates a protection wall between your assets and the business assets.
What Can a Business Entity Do?
Business Entity makes money.
Business Entity can own property.
Business Entity can enter into contracts and agreements.
Business Entity can open bank accounts.
Business Entity can sue and be sued.
Business Entity can pay taxes.
Set up a Legal Entity, which can interface with customers, clients and vendors.
Safeguarding Your Assets
By setting up a Legal Entity, you can keep your personal assets safe.
In case of lawsuit, the creditors can attack the assets of the Legal Entity and they cannot get into your personal assets.
Personal Liability Protection
People set up a Business Entity for personal liability protection.
In case, if you won’t create a Business Entity, the law will view your business as a Sole Proprietorship (if there is a single owner) or a Partnership (if there are two or more owners).
If a Sole Proprietorship or Partnership is sued, the owner’s personal assets are used to settle business liabilities and debts.
If you have a Business Entity and this business is sued, then the court can take over the assets of the business, but not your personal assets.
So it is better form a Business Entity, which creates a shield of protection between your business and personal assets.
There are 2 types of Business Entities that people form are: Corporation, Limited Liability Company (LLC).