How to Protect Your LLC Structure
- Koen Van Duyse
- Apr 26
- 1 min read
Forming an LLC is a smart first step, but simply filing Articles of Organization isn’t enough. To keep your LLC protection strong and maintain the personal liability protection it offers, you must actively run your business like a true, separate legal entity.
Here’s what that means in practice:
Maintain separate business and personal finances: Open a dedicated business bank account and credit card. Deposit all business income into that account and pay all business expenses from it. Mixing funds — even temporarily — can weaken your liability shield.
Sign contracts using the full LLC name: Always enter into contracts, agreements, and leases under your LLC’s full legal name, not your personal name. This ensures that your LLC, not you personally, is responsible for the obligations.
Keep up with annual filings and fees: California (and most states) require LLCs to file an annual statement of information and pay minimum franchise taxes. Missing these filings can lead to penalties, suspension, or even administrative dissolution of your LLC.
Avoid commingling funds or treating the LLC as a "personal piggy bank": Do not use business funds to pay for personal expenses like groceries, vacations, or household bills. Document all business expenses properly and reimburse yourself correctly if you incur legitimate business expenses personally.
If you fail to respect these formalities, creditors or courts could "pierce the corporate veil" and hold you personally liable for business debts or lawsuits. This defeats the main benefit of having an LLC.
Protect your hard work by operating your LLC professionally, keeping clean financial records, and treating the company as truly separate from your personal affairs.
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