A Nevada LLC Gives Protection from Personal Liability

When operated correctly, a Nevada limited liability company provides a "corporate shield," also called a "corporate veil," to protect its members (owners) from personal liability under most circumstances.

Most people understand that a Nevada corporation provides a "corporate shield" to protect its shareholders/stockholders/owners from personal liability. But the protection in Nevada is broader than that. Indeed it is inaccurate to view the concept of a "corporate shield" as applying to protect the owners of Nevada corporations only; the term "corporate shield" equally applies to protect the owners/members of Nevada LLCs as well.

To understand the difference between personal liability and what could be termed business (or company) liability, it is useful to understand that Nevada law generally defines a "person" and recognizes two kinds of "person." As a general matter, a "person" under Nevada law can sue in court or be sued in court. The first, most obvious, common-sense kind of person is a human being, also called a "natural" person under Nevada law. So for example a woman can sue in court, or she can be sued in court; if she is sued personally in court, she is subject to personal liability, which means her personal assets are placed at risk. The second, less obvious, more tricky kind of person is a legal entity, which is often called by a variety of names, such as "artificial" person, "statutory" person, "legal" person, or "entity" person. This second kind of person is formed (or created) by Nevada law -- by Nevada's business entity statute that was enacted by Nevada's legislature. The two most common forms of a Nevada entity person are a Nevada corporation and a Nevada LLC. So for example a Nevada LLC can be represented by an attorney as the attorney's client; it can sue in court, or it can be sued in court. When a Nevada  LLC is sued in court, it is subject to its own business/company liability, which means its own business/company assets are placed at risk. But because its members/owners are protected by the "corporate shield," the LLC's members/owners ordinarily are not subject to personal liability just because they happen to own the LLC.

Claflin Law can help to protect your business from business liability and to protect you as a business owner from personal liability.