| If you are the single owner of a business which is run | | | | limited liability company operating the business and |
| through a limited liability company, you must have an | | | | entering into business transactions. This is proven |
| operating agreement LLC. Why? Because without one, | | | | through the Operating Agreement for LLC and related |
| the chances of you losing your liability protection | | | | documents showing compliance with the main |
| greatly rises. | | | | document. |
| A SINGLE MEMBER LLC IS SUBJECT TO MORE | | | | This Agreement must contain sufficient provisions |
| RISK OF PERSONAL LIABILITY | | | | acknowledging the company as a separate and |
| While it is established that a single member of a limited | | | | independent entity and the actual operator of the |
| liability company has just as much protection under the | | | | business. As part of this, the major must have |
| law as companies with more than one member, the | | | | provision is one that require that votes of owners be |
| single member company is subject to a higher risk of | | | | made for major decisions. And, the single member |
| challenge. | | | | must follow these procedures when operating the |
| This is because the LLC laws do require that the legal | | | | business. This creates a structure where the owner is |
| entity itself is running a business and not you personally. | | | | acting separate and apart from the business. |
| Because a single owner does not have to answer to | | | | COMPLIANCE BY THE SINGLE MEMBER IS EASY |
| anyone other than himself, there is always a risk that a | | | | BUT NECESSARY |
| person forms a legal entity but then ignores it when | | | | Do not think that you will have to subject yourself of |
| running a business. | | | | onerous or substantial paperwork obligations. |
| Even if this is not true, an angry customer or party that | | | | Maintaining paperwork for a single member LLC is |
| is suing you will try to convince a court that this is the | | | | easy. This is done through what is called the Written |
| case. This challenge is called piercing the veil and one | | | | Consent. |
| way to guard against this is by having a proper | | | | A second must have provision in your Operating |
| operating agreement for your LLC. | | | | Agreement is the written consent authority provision |
| THE OPERATING AGREEMENT LLC ESTABLISHES | | | | which allows the single owner to vote and act via a |
| SEPARATION AND THIS PROTECTS THE OWNER | | | | simple written approval document. This will allow you to |
| The best way to shoot down any piercing claim that is | | | | very easily meet and document sufficient |
| trying to get at your personal liability is to prove through | | | | independence to preserve your personal liability |
| documents that indeed it is and always has been the | | | | protection. |