Running a business in Washington without liability protection is like sailing stormy seas without a lifeboat. Without a clear divide between your personal and business finances, you face serious financial risk. Forming a Limited Liability Company (“LLC”) creates a layer of protection that sole proprietorships simply can’t match, shielding your personal assets from business-related liabilities.
Limited Liability Protection
The most critical advantage of forming an LLC is the ability to separate your personal assets from your business liabilities. Sole proprietors are personally responsible for all debts, obligations, and lawsuits arising from their business operations—meaning creditors and plaintiffs can directly target their personal savings, homes, or other assets. In contrast, an LLC creates a legal barrier that limits liability to the company itself. Here are two examples to illustrate how that protection works:
- A Disputed Contract: Imagine a scenario where a sole proprietor signs a service agreement with a client, but the client alleges that the work delivered falls short of expectations. If the client sues for damages, the sole proprietor’s personal savings and property are at risk. However, if the business operates as an LLC, only the company’s assets—not personal assets—are vulnerable to such claims.
- Accidents and Injuries: Consider a business owner running a landscaping company as a sole proprietorship. If an employee accidentally damages a customer’s property or someone is injured on the job, the business owner can be held personally liable. An LLC contains that liability within the business—keeping personal assets off the table.
Take Control of Your Business Risks
For entrepreneurs in Washington, the choice between operating as a sole proprietor and forming an LLC could mean the difference between financial security and vulnerability. The LLC structure provides peace of mind by insulating personal assets from business-related liabilities and creating a safer legal framework for growth.
If you’re ready to make the transition from a sole proprietorship or partnership to an LLC, our team can help you take the next step. Contact our office at info@beresfordlaw.com or by phone at (425) 776-4100 to discuss your options.