Limited liability of a company
At the time of starting a new company you need to have a clear understanding of how to register it. This will determine the way how you manage your company in the long run as well. Most small business owners out there are keen to operate their companies under a sole proprietorship. That is because it is easy to start a sole proprietorship business and manage it.
However, it is not the best option available for you to consider as it would create an impact on your personal asset protection. For example, if your business is sued for its bad debt, lenders will have access to your personal assets and personal finances. To make sure that you do not have to deal with any such consequences, you should be going forward with an limited liability. Continue to read and we will be sharing more details with you on how a sole proprietorship will be able to provide protection to your personal assets.
Starting your Limited liability company
When you register your business in the form an LLC, you will be creating a new legal entity for it. Along with that, you will be separating you and your personal assets from the business assets. Moreover, it can separate you from other shareholders of your business as well. The best thing about being the owner of an LLC is the ability to experience limited liability. In case your LLC is sued, falls flat, or files for bankruptcy, you can make sure that all your personal assets are protected from being sized. In other words, there is no possibility for the lenders to sue your personal assets to satisfy the company debts.
How can you protect your personal assets?
Your personal assets include your home, your bank account, and other things registered under your name. When you sign up for a sole proprietorship, you will be exposing these personal assets to the risk of being sued under company liabilities. If you do not want that to happen, you must register your business in the form of an LLC.
Imagine a situation where you have registered your company as an LLC and ended up declaring bankruptcy. In this situation, you will only lose your capital contribution to your business. However, there are a few caveats that you need to be mindful of here. Similar to other types of business incorporations, the owner of the LLC will have to face personal liabilities if they have any personal guarantees on a specific type of company debt.
There are a few ways on how the creditors will be able to access your personal assets. One such way how that can be done is by piercing the corporate veil. This would happen when the LLC member has co-mingled personal assets along with company assets. If you fail to contribute sufficient assets for your company, you will end up with this. Even if you transfer any of the personal property that you have to the company under a company asset, you will be providing an option for the creditors to access your personal assets. This situation is called a fraudulent conveyance.
No matter what, you can consider an LLC as a great option available to deliver maximum protection to your personal assets. Even if your business ends up with bad debt, you can keep your personal assets protected. However, you should learn how to responsibly manage your LLC, while treating your business finances separate from your personal finances.
How to start LLC in American Samoa
Setting up a limited liability company (LLC) in American Samoa can help you establish an independent legal entity for conducting business operations and holding cryptocurrencies such as NFTs. LLCs are available in states, territories, and insular areas such as Puerto Rico and American Samoa. Also known as Limited Liability Companies, LLCs are special entities created under state laws that provide liability protection to owners involved in business activities.