In Post 1 of this series, we began to examine ways to protect your LLC. In this post, we will continue with that discussion.

continued from Part I

3. Document, document, and document. Document all business transactions with a contract, agreement, or other writing that clearly states the transaction is with the LLC. Always sign documents with the name of the LLC, as either the Member or as a Manager. Signing as “John Doe, Member – Doe LLC” rather than as “John Doe” can help prevent personal liability.

4. Be separate. Open a LLC bank account and make sure that all the funds of the company are deposited into, and drawn from, that LLC account. Likewise, you should establish a separate e-mail address and phone number for the LLC. Using your personal bank account, e-mail, and phone number for the business could expose you to potential liabilities of the business. Remember, if you can’t show the distinction between what is you and what is the business how can you expect a judge or jury to see it?

5. Purchase insurance. The LLC as an entity can provide a layer of protection from business debts and contractual obligations, but liability for personal injuries may be significantly different. In a small business setting if the business is negligent then it is very likely the owner is also negligent. An injured party may not be able to recover damages attributable to the business’ negligence, but that doesn’t prevent an attempt to recover from the owner’s negligence. A little insurance can go a long way in providing security and peace of mind.

A LLC does not make you “bullet proof” and there is no guarantee the LLC will protect your personal assets from every possible business claim. However, following these five steps can help strengthen the LLC’s protection.