Corporations and Limited Liability Companies (“LLCs”) offer a layer of protection against individual liability. When you think of ways to minimize your individual liability, think in terms of three layers of protection:
- Be careful and have clear procedures in place for your business;
- Select an insurance agent who will be familiar with your business and can advise you for all of your insurance needs; and
- Form a Corporation or LLC and follow the required formalities for that entity.
Corporations and LLCs are entities registered in Virginia with the State Corporation Commission and renewed annually. The majority of the time, the client can pick the name that they want for their Corporation or LLC as long as the name is distinguishable and is not already being used by another entity. In order to take advantage of the protection the entity provides certain formalities must be observed so as to distinguish the entity from the individual.
Corporations and LLCs are used to protect the business owners’ personal assets and property from liabilities in the event of an accident or other loss. There are different benefits based on which entity you, your accountant, and your attorney—working together—decide is best to fit your needs. For instance, if a Corporation or LLC is sued, the entity must be represented by an attorney. The entity must have a Registered Agent on file with the State Corporation Commission. The Registered Agent is the person who would be served if the Corporation or LLC were to be sued. Ms. Fine offers her service as Registered Agent for an annual fee. The Registered Agent must give their address and contact information to the State Corporation Commission and the information is then listed on State Corporation Commission’s website.
The process to form a Corporation or LLC is quick and can be done online. Once the LLC or Corporation is formed you can apply for a federal identification number, also online, which will be needed to open up a bank account in the Corporation or LLC’s name. If you are looking to start your own business, then now is the time to consult with an attorney and your accountant to see what options fit your situation the best. It is best to set up a safety net to protect yourself and your individual assets before it is too late.