Forming a business with multiple partners is an excellent way to achieve greater success than going into business alone. The combined capital makes the initial start-up far easier on everyone involved. However, risks still exist. What if one of your partners racks up a sizeable personal debt that they cannot cover by themselves? Your business may very well be in danger. This is why attorneys and CPAs often recommend an LLC to their clients because it has more of the necessary protections that you arne your partners are looking for.
With a Limited Liability Corporation, or LLC, this risk is mitigated. Individual risk outside of the confines of the business will not trample over the fence and ruin the garden you and your partners have spent so much time and effort growing.
There are, of course, other benefits as well. Should you seek investors outside of your intended partnership, an LLC will protect the business from being hijacked by greedy investors. This means your business can continue to run as you and your partners see fit – without interference of those who are only financially involved in your business’ affairs.
Trying to go it alone in starting your company? You may be in luck. Depending on the state your business is headquartered in, you may even be able to set up an LLC without partners. This affords you with a host of opportunities to remove the risk of personal financial ruin in the case of your business accumulating too much debt.
Starting a business is an admirable endeavor, and the heart of what this country was founded on. But it’s important to work smart. Shield yourself by organizing your business as a Limited Liability Corporation.