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Jim Reilly
Jim Reilly, Attorney
Category: Business Law
Satisfied Customers: 1805
Experience:  CA Atty since 1976, 10 years as General Counsel CA corps.
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For RunTam38 Previous question Im starting a business,

Resolved Question:

For RunTam38

Previous question:
I'm starting a business, LLC consulting company, in Whittier, California. I'm going to base the business out of my home to save on start up costs. If the business is sued, could a lien be placed on the house? The only way the home is related to the company is the address. No business takes place on the property.

Optional Information:
Whitter, California

Already Tried:
Looking through the SBA website as well as the California website.
Customer(Online) -- 1 Accept / 1 Question 1 Answer Accepted Status: We're Waiting For You (Relist)   Value: $20 Answer
April 29 2009 at 12:39 AM (11 minutes and 49 seconds later)          ACCEPTED
HelloCustomerand welcome to JustAnswer.

If the LLC is set up correctly that status will insulate you from personal liability for the debts of the company. That being the case, your creditors could not reach your personal assets to satisfy company debts.

That also means that your house would be protected, as well. Think of it this way -- because the LLC is a separate legal entity from you as a person, it would be no different than if you were doing business from some other location, such as a rental office. The landlord would not be liable for your company's debts, would he? Same thing with your house.

Furthermore, it wouldn't matter if you did business in the house. Even that would not put your house at risk.

The key, of course, is to properly set up your LLC and register it with the California Secretary of State so that your business actually has LLC status. Do that first and the rest will follow.

Thanks for asking your question here on JustAnswer and good luck with your business. If you have any other questions, please let me know.

Jim Reilly, RunTam38 ----- Thank you for the opportunity to help you. If you are satisfied with my answer, please "accept" it. If you would like me to answer a future question, please put "For RunTam38" in the subject line of your new question.

Follow up question:
You mentioned setting up the LLC properly with the state. We've filed the Articles of Organization with the state. Is there any other paperwork that would be required to have it completely set up as an LLC? I've researched the IRS website and it does't appear that there would be anything else needed for the initial set up, but the way you phrased it made me think twice.
Submitted: 8 years ago.
Category: Business Law
Expert:  Jim Reilly replied 8 years ago.
Hello againCustomer I'm sorry my previous answer wasn't clear.

As far as setting up your LLC is concerned, since it will be a domestic company, the only requirement for setting up your LLC is completing and filing Articles of Organization (Form LLC-1) with the Secretary of State. I didn't mean to imply otherwise.

Of course, there are other legal requirements for operating any business (including having a business license from the city, tax ID numbers from the IRS and the California Franchise Tax Board (well, actually, you get the number from the Employment Development Department, but use it to file FTB tax returns) and, if your product or services are subject to California sales tax, a California Board of Equalization seller's permit and TIN (Tas Identification Number).

Failure to take care of tax matters properly and then incurring an unpaid tax liability can be grounds for going beyond the protection of the LLC to reach your personal assets, so to that extent you should make sure all of these bases are covered as well.

I hope this makes everything clear. If not, or if you have any other questions, please let me know.
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