A single-member LLC is a limited liability company where only one person is the owner of the company. A limited liability company in Florida can have multiple members or just one member. However, there may be benefits to having a limited liability company with multiple members rather than having a single member LLC. Single-member limited liability companies may not enjoy the same kinds of asset protections that multiple member limited liability companies enjoy. Of course, the protections afforded a single-member LLC depend on the type of credit issues an individual or company is facing. These issues can get complex, so whether you are thinking of forming a single-member LLC or have questions about whether your single-member LLC offers you robust asset protection, a business law firm may be able to help. Legal Counsel, PA is a business law firm in Orlando, Florida that can assist you with determining what kind of legal structure is best for your small business.
Single-Member LLC vs. Sole Proprietorship
What is the difference between a single-member LLC and a sole proprietorship? With a single member LLC, the business is considered separate from the owner for tax and liability purposes. However, in Florida, there may be ways that a single-member owner of an LLC could still be vulnerable to creditors. While multiple member LLCs benefit from asset protection by virtue of having multiple members, in Florida, these laws that protect multiple member LLC may not apply to single-member LLCs. So, if you are considering using the LLC structure to protect your assets from creditors, you may want to speak to a business law firm first.
Other benefits of having a single-member LLC over a sole proprietorship include the legitimacy that the LLC label provides and also the fact that an LLC’s business name must be registered with the state. Once the LLC’s name is registered, another business with the same name cannot operate. Is a single-member LLC right for your business? Legal Counsel, PA is an Orlando, Florida business law firm that can review your situation and help you understand your options. The benefits and protections of having a single-member LLC can vary depending on your needs and situation. Contact Legal Counsel, PA, a business law firm in Orlando, Florida today to learn more.
Single-Member LLCs and Asset Protection
LLCs typically afford their members asset protection. What does this mean? This means that if one member of an LLC gets into debt, the creditors won’t be permitted to go after the assets of the LLC when trying to get the debt paid. This asset protection strategy works when there are multiple members of an LLC because the courts will generally hold that all the members of an LLC shouldn’t be held accountable for the debts of a single member. But, if you only have a single-member LLC, then creditors may still be able to go after the assets of the LLC.
An LLC also provides asset protection for its members in that individual members generally won’t be held personally accountable for business debts. This means that if the business takes on debts that cannot be repaid, creditors generally won’t be permitted to go after the LLC member’s personal assets or property. However, there may be exceptions to these protections. When an LLC takes out a loan, members might be required to make personal guarantees. If the LLC is a single-member LLC and there isn’t a clear distinction between the LLC and the individual, creditors may be able to go after the personal assets of the owner of a single-member LLC.
Want your single member LLC to provide robust asset protection? Single-member LLCs may have limitations when it comes to asset protection. However, Legal Counsel, PA is a business law firm in Orlando, Florida that may be able to assist you with structuring your single-member LLC so that it provides the most robust asset protection possible. Our business attorney can also review your business situation to help you find the best structure for your business. Contact us today to learn more.
Alternatives to Single-Member LLCs?
Depending on your goals, there may be alternatives to single-member LLCs that may offer you greater asset protections. For example, by giving a family member or child an interest in your single-member LLC, your single-member LLC could be converted to a multi-member LLC, thus granting your LLC more robust protections. There might be other options available if you are looking for robust asset protection. Furthermore, if you are facing problems with creditors, either stemming from business debt or personal debt, and have questions about whether your single-member LLC will provide robust asset or debt protection, you may want to speak to Legal Counsel, PA, a business law firm in Orlando, Florida today. Our firm can help you understand what protections you might have, and your options going forward. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.