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Starting a Small Business/Can an LLC protect me in a lawsuit ?



I have a business idea in the field of art where I would mostly be doing work as a freelancer getting paid only "donations" or ad revenue.

I heard that getting an LLC would protect my personal assets in the event of a lawsuit. Is this true?

Thanks for your time.



A limited liability company, like a corporation, generally limits the liability of the owners of the entity.  In most cases, although the owner can lose his entire investment in the business, a person dealing with the business cannot go after the personal assets of the owner.  The LLC provides excellent protection from contractual claims by third parties such as suppliers or customers.

However, there are several exceptions to the general rule.  For example, when the owner is the only person involved in the business, any action that the business takes is generally performed by the individual.  A person is always responsible for the consequences of his own actions.  

For example, if you are employed by a major corporation and, due to your reckless driving, you have a traffic accident in a company car on while on company business, the injured party can sue you as well as the company you work for.  The same would be true if the business were your own LLC or corporation.

Another example would be if you used an image in violation of someone's copyright.  While the copyright owner might sue your LLC, he could also reasonably argue that YOU, not just your LLC, infringed his copyright.

Thus, while an LLC provides protection in most cases for contractual claims, for other types of claims the protection is far from complete.

There are a number of other ways that an owner of an LLC can have personal liability.  For a more complete discussion, I suggest you read my short article How Limited is Limited Liability?


Starting a Small Business

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David K. Staub


I am a business and tax attorney and have spent more than 35 years assisting people in starting a wide variety of businesses. I can answer questions about the basic differences between the various entities available to new businesses, including limited liability companies, corporations, S corporations and partnerships. I can provide guidance in other areas facing start ups, such as hiring employees, signing contracts and obtaining necessary licenses. I can also direct people to sources for answers to specific legal questions which cannot be answered in a forum of this nature.


I have an extensive practice in the mergers and acquisitions area and have been involved in the tax and legal issues on hundreds of business transactions.

Staub Anderson LLC
Illinois business attorneys

Practice Areas
Business Organizations


-Joint ventures
Mergers & Acquisitions
-Buying/selling business
Securities Law
Tax Law
Technology Law
-Software licenses
-Development agreements


Illinois State Bar Association; Chicago Bar Association (former Chairman of the Corporation & Business Law Committee and former Chairman of the Mergers and Acquisitions Subcommittee; former Executive Committee member, Federal Tax Committee and Chairman of subcommittee on general tax issues); Keystone Foundation (Trustee); Association for Corporate Growth; Midwest Entrepreneur Forum; Midwest Association of Alpha Delta Phi

Commerce Magazine; YLS Journal; ISBA Section of Taxation Newsletter

Harvard Law School, J.D., 1977; University of Illinois, B.S. in Accounting, with highest honors, 1974

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