How to Help Maintain Limited Liability After Forming an LLC


Posted over 5 years ago. Applies to Pennsylvania, 10 helpful votes



Interact using the LLC's Name

All interactions with any third parties such as customers or creditors should be done in the LLC's name, and, where in writing, on Company letterhead.


Maintain Insurance

Maintain adequate insurance for the LLC.


Use the LLC's Full Legal Name

Any use of the Company's name should always include the entire legal name of the Company ("ABC Company LLC"), so that it is clear to third parties that they are dealing with a limited liability company and not the individual members, managers, or officers. The Company's correspondence, contracts, business cards, marketing materials, websites, invoices, statements, tax returns, etc. should use the LLC's full legal name to clearly indicate that it is a Company.


Make it Clear the Company Owes the Money (not you individually)

All "accounts payable" (such as credit cards, telephone bills, utility bills, etc.) should be in the LLC's name and show the Company as the debtor.


Use Officer Titles when you Sign Contracts

All Company agreements, correspondence, and writings in any form whatsoever should be entered into or signed by one or more officers as "President" of the Company (or as "Manager", "Authorized Member" or whichever other description or officer's title is applicable). Always indicate a title so that it is clearer that you are not signing individually.


Keep Separate Bank Accounts & Don't Mingle Funds

Maintain a separate bank account in the name of the LLC. Do not commingle corporate funds with the funds of owners or of a related company.


Maintain Records

Retain adequate financial and company records. This includes records that must be retained for tax return purposes and organizational records such as the Company's Certification of Organization, EIN (Employer Identification Number), Operating Agreement, etc.


Observe Corporate Formalities

Observe the formalities of regular (or at least annual) meetings and of keeping written records such as minutes, developing written resolutions for Company actions, as well as the policies and procedures established in the Certification of Organization and Operating Agreement. Do this even if the Company does not have numerous owners.


Use Caution with Guaranty and Surety Agreements

Remember - if you or any other person agrees to be a guarantor or surety of a contract or loan involving the Company, this entails undertaking personal liability for the Company's obligations. These are often found in loan agreements and commercial lease agreements.

Additional Resources

Could Your Business' Liabilities Become Your Personal Liabilties?

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Related Topics

Small business LLCs

An LLC (limited liability company) is a business entity that has elements of both a corporation and a partnership (or sole proprietorship).

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