I frequently get calls from entrepreneurs and existing business owners looking to establish a business entity, such as an LLC or corporation. Their chief concern? Limiting liability for their new venture. While formalizing the business organization is part of the process for most new business ideas, it’s not necessarily the first place to start when looking to “limit liability.”
Creating a business entity is of course important and a priority for any business set-up. I am a business attorney, after all. Set-ups, contracts, deals, and operations are all offerings of my practice. But it’s important to first understand one’s actual liability exposure before taking actions and making investments to limit it. Some tools and techniques may be overkill or completely ineffective. Or, depending on the capital available for start-up and operating costs, they may fall lower on the priority list. To make educated decisions, a little homework is in order.