Risks of Getting Sued With an LLC

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The Limited Liability Company, or LLC, business structure often attracts business owners with its easy setup, simple management and liability protection. Though an LLC business structure doesn’t make a business less likely to get sued, the legal protections an LLC affords its owners can reduce their personal liability from lawsuits.

Debt Protection

In most states, creditors who sue an LLC can recover money and assets held by the business only. Because the LLC is a separate legal entity from its owners, known as members, courts typically don't require members to pay debts that the business has incurred.


When a customer or other party brings a liability suit against an LLC, courts typically don't hold members or individual employees personally liable. If the plaintiff succeeds, damages may be awarded from the business assets and holdings, not from those of its members.


A number of exceptions could result in personal liability for LLC members and employees. If an LLC member personally guarantees a business debt, as is common for new LLC businesses with a limited credit history, creditors may sue that member if the business defaults on the debt. Similarly, LLC members and employees who are personally negligent, who intentionally commit crimes or who treat the LLC as an extension of their personal holdings may be held personally liable for actions of the business. In these cases, courts may pierce the corporate veil to pursue individual members rather than the business itself.


About the Author

Keith Evans has been writing professionally since 1994 and now works from his office outside of Orlando. He has written for various print and online publications and wrote the book, "Appearances: The Art of Class." Evans holds a Bachelor of Arts in organizational communication from Rollins College and is pursuing a Master of Business Administration in strategic leadership from Andrew Jackson University.

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