Tip #4: An LLC is your Castle

 TIP #4

An LLC is like a castle. You have your Articles of Formation which are your concrete Foundation. You have your Operating Agreements, your Organization Minutes, and your corporate documents showing that your LLC is operating separately from you as your Walls of Protection. You have your business assets titled in the name of the business such as vehicles and real estate, aka your treasure, inside your castle. And you have insurance policies which are the archers on your Walls defending your LLC if you get attacked, aka sued.

 EXPLANATION

Viewing your LLC as a castle is the best way to understand how an LLC operates. As the Member of the LLC, you’re the Lord of the Castle. You’re separate from the castle, you can leave and go build another Castle. But you have your assets protected back in your castle from any angry trolls that are under a bridge or on the internet, that may attack you with frivolous but costly lawsuits.

If you’ve just filed your Articles of Formation and think you’re protected because you now have an LLC, that’s similar to pouring the concrete on a foundation for a castle and thinking you’re now safe from attack. You’ve laid the foundation, but now you have to build your walls of protection by having an Operating Agreement, Organizations Minutes, corporate records, which all show that the entity is being operated separately from your individual self. The protection lies in it being considered separate for you, so that’s why those documents are so important and why they are your Walls of Protection. Your Walls can only protect what’s inside the castle, so make sure your business actually owns the assets of the business, such as vehicles, real estate, digital products, and bank accounts.

Practical and Actionable Takeaway: Draw a picture of your business as a castle and don’t ever stop viewing it that way.