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AttyHeather, Attorney
Category: Business Law
Satisfied Customers: 677
Experience:  Attorney with 15 years experience
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I want to start a online business, but I'm from outside of

Customer Question

I want to start a online business, but I'm from outside of the US. When I setup a LLC:
Will that protect my personal assets in case of any liability (product, injury etc)?
Do I have any specific tax documents needed or income statements or other paperwork each year?
Submitted: 8 months ago.
Category: Business Law
Expert:  AttyHeather replied 8 months ago.

Hi! I'm Heather. I've been a practicing attorney for the last 15 years, and I'd be happy to assist you for informational and educational purposes.

Expert:  AttyHeather replied 8 months ago.

If you set up an LLC properly and if you run the LLC consistent with LLC law, then yes, the LLC will protect your personal assets. You will need to get an FEIN with the Federal government, and then you will need to register your LLC with the state in which you plan to organize your business.

In addition, you will need to keep the LLC's assets and bank accounts separate from your own personal, and you need to comply with annual meeting requirements and adequately fund the LLC, and you will need to make sure that a form of the term "LLC" is in the name of your company. When you sign documents on behalf of the LLC, you will need to sign them as either a member or manager of the LLC, rather than in your own personal capacity.

Properly setting up an LLC can be a technical process and many people require a licensed attorney to assist them to ensure they do it correctly.

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Customer: replied 8 months ago.
I don't need a product liability insurance anymore ?
Expert:  AttyHeather replied 8 months ago.

If your business is producing a product, then yes, you should get product liability insurance for the business. That insurance will help defend your business in the event that it is sued. Having the product liability insurance is a different type of protection that you would put in place to protect you from liability of the business in the event of liability for a defective product. Setting up the business as an LLC on the other hand, protects you personally. If your business is sued for product liability, if you have set up your LLC properly, your personal assets should be shielded from the litigation and from any judgment creditors. So you are really talking about two different things.

Customer: replied 8 months ago.
I'm dropshipping from china mostly, so I will not be the manufacture. I don't have control on what they ship.
It are low cost items, so I will simple refund them when they don't receive or don't like the item. How to protect my personal assets in cast of injury because of a bad product, like a product is not a very good material or something else.
Expert:  AttyHeather replied 8 months ago.

Setting up the LLC properly and obtaining the insurance are the two best ways I can think of to protect yourself. Aside from that, you might consider ordering samples of the product yourself so that you can evaluate them before you start sending them to your customers. Finally, you might consider having your supplier from China agree to indemnify you in the case of a bad product, and inquire of them what is the procedure that would be followed if someone makes a claim against you due to their faulty product.

Customer: replied 8 months ago.
Insurance looks not possible, because I'm not the manufacture. Is a LLC without insurance enough?
What will happen when someone sues me? Will I only risk the money in the LLC?Of course we try to select the best products and test them by ourself to order it for ourself so we know the quality, but it still can happen that the Chinese factory / supplier will ship different to customer or people can get injured by the product. What to do?Agreements with the Chinese dropshippers is not possible in most cases.If someone sues me who will pay the Attorney to solve the issue, is that the LLC or my personal assets?
Expert:  AttyHeather replied 8 months ago.

If you set up the LLC properly, and if you run the LLC properly, and keep your personal affairs separate, then if you are sued, your personal assets cannot be touched in the lawsuit. If your LLC is sued, the LLC will have to pay for the attorney, so you can use business income to pay the lawyer. There is not a free lawyer for this, unless you have insurance in place to defend a situation like this.

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