If you're currently doing business as a sole proprietorship or partnership, you're fully liable for all business debts, including those incurred by your partners. When you create an LLC, you take the first step in business protection planning. A properly formed limited liability company creates a legally enforceable layer of protection between you personally and your business. LLC is now the most common small business entity chosen. Basically, lawmakers and the Internal Revenue Service got together and made decisions to create the ideal legal and business entity for business - the limited liability company. The law does provide some protection, but in order to get that protection, the company owners need to follow certain requirements. Failing to follow those requirements opens the individual owner up to liability of the company. This is true no matter what state you use to start your LLC. Your lawyer can address your specific situation. You will have to file articles of organization.
Honor the separation between yourself and your business.
If you are careful, you can take advantage of the protection you have obtained by organizing an LLC. You may become personally liable to a business creditor if you mix business and personal debts. So make sure your entity paperwork meets all tax and legal requirements. And when you sign contracts, do so as an officer of your LLC. For example: "Joe Jones, as Managing Member of Acme LLC." Your lawyer can address your specific situation.
Insure common risks.
Limit your liability for personal injuries and property damages by having sufficient insurance. You won't have to pay out of your own pocket if the insurance coverage is sufficient to pay such damage claims. Your insurance agent can tell you what kinds of special coverage may be available for your type of business, such as general liability, E & O and rental coverage to name just a few. Your lawyer can address your specific situation.
It is highly recommended to have an the operating agreement which can help define your company ownership, responsibilities, and ownership changes. Your lawyer can address your specific situation. Most states do not require the filing of an operating agreement, but it is a good idea to prepare an operating agreement, particularly where the LLC has more than one member. It lays out financial and management rights along with responsibilities of the LLC members. It answers questions such as: who contributes what if the LLC needs more capital, when and how business profits will be distributed, under what terms members can leave the LLC.
Talk with your lawyer. Your lawyer can address your specific situation. And, good luck in your new business.