Looking for advice on a legal issue. Here's what happened.
single-member LLC asset protection. I've been dealing with this for about 3 weeks now and the situation isn't improving.
I have already consulted briefly with a lawyer but did not get a clear answer.
What's the typical outcome in situations like this?
Just want to point out — the statute of limitations might be a factor here. In some states it's as short as 1-2 years. Don't sit on this too long.
I had a similar issue and ended up consulting with an attorney. It was worth the $200-300 for the initial consultation just to understand my rights.
I've seen this play out several times in my field.
In my case, it took about 1-3 months to resolve. The key was escalating to a supervisor/manager.
I've dealt with this before.
The biggest mistake people make in this situation is having everything documented. I'd recommend keeping a detailed timeline instead.
I specialize in this area of law. Here's my take on the legal issues.
This is a common situation and the law is fairly clear. Under the relevant statute, actionable.
You should consult with a local attorney who handles these cases. Many offer free initial consultations.
CPA who works with a lot of small business owners on entity structuring here. I want to push back on the common advice to "just form in Delaware" because for a single-member LLC, it is often not the best choice depending on where you actually live and operate.
The Delaware advantage is overstated for single-member LLCs. Delaware's main benefits -- the Court of Chancery, well-developed case law, and the charging order as the exclusive remedy -- primarily benefit multi-member LLCs and corporations. For single-member LLCs, many courts (including some Delaware courts) have held that the charging order protection does not apply because there is no other member to protect.
Here is the key issue: if you live in Georgia and form a Delaware LLC but operate your business in Georgia, you still need to register as a foreign LLC in Georgia, pay Georgia franchise taxes, and you are subject to Georgia courts. You are essentially paying two states for the privilege of a Delaware formation that may not give you any additional protection.
Better options for single-member LLC asset protection:
Regardless of where you form, the actual asset protection comes from how you operate the LLC, not the state of formation. Maintain separation between personal and business finances, keep adequate records, carry sufficient insurance, and have a solid operating agreement. No state formation will protect you if you treat the LLC as a piggy bank.
@confused_freelancer_GA -- since you are in Georgia, I would recommend either forming in Georgia (simplest) or Wyoming (strongest single-member protections). Delaware would be my last recommendation for your situation.