LLCs are a smart way to go if you are self-employed or part of a small company and want to protect lawyers and creditors from going after your personal assets like your house.
But after you pay an attorney to draw up and file the papers, you also need to take some steps to make sure that no one can "pierce the corporate veil."
For starters, you will need separate bank accounts for your business. It not only makes it easier to cash checks made out to the business name, but it keeps business assets separate. Same with credit cards.
And while you're at it, you need to ensure your bookkeeping separates your personal and business affairs.
Banks and credit card issuers have gotten wise to this--you can expect your credit card issuer to ask you to personally guarantee your obligations to them. Be very aware that in your dealings with that institution, that your LLC status will NOT protect you.
This post is based on my personal experience--I am not an attorney and for specific advice, you'll want to speak to one.
Nonetheless, I sleep a little better at night knowing I have taken some steps to protect myself by setting up an LLC.
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