Fortunately, one of the most critical purposes of our corporate and LLC laws is to protect private investors from personal responsibility, allowing society and the common good to advance. To receive this umbrella of security, however, businesses must follow the LLC laws to the letter. When forming an LLC on their own or with the assistance of a discount legal document service, paralegal, accountant, or even a lawyer who does not specialise in LLC formation, people often make the following serious mistakes. (While the services of a tax accountant are extremely valuable, they are seldom used for asset security purposes.) Read this Elite Finishing LLC
Limited Liability Company (LLC) The first mistake is to wait until a tenant has filed a lawsuit or taken legal action against you before forming an LLC. If you form the LLC after the fact, you can receive no insurance for your personal assets unless the LLC is in effect until a tenant makes a claim or takes legal action. It never ceases to amaze me how many clients call in a panic, trying to form an LLC as soon as possible after being sued. It’s usually too late at that point.
Second LLC blunder: failing to properly move the rental property into the LLC when it is established. Only if the underlying rental property is converted into and kept by the LLC does it offer asset security to its owners. This crucial move must be completed with the help of a Grant Deed or Quitclaim Deed that is correctly worded and notarized. Unfortunately, many people either could not make the move or tried to do so on their own with the help of a paralegal or a document preparation service. Mistakes or omissions can quickly lead to an unintentional and needless property tax reassessment if not done correctly, down to the smallest detail. Reversing a reassessment that was caused by a client who tried to transfer their property without adequate advice can be very costly. In retrospect, the perpetrators of these errors wish they had retained the services of an accomplished LLC attorney from the start.