Confused about LLC's

[Keith W.]

The more I research the concept of forming an LLC, the more confused I get.

For the gist of my understanding, proper insurance should cover you for liabilities. But on the other hand, an LLC formed on a specific property limits your liability to only that property. In other words, without the LLC, and you own multiple properties, then they come into play for the lawyers to go after. I think this is my biggest concern with not having each property covered by its own LLC. Please opine.

My other concern is whether I should set up my business as a whole in an LLC. My thinking is that I will set up the business as its own entity establishing business credit.

If I were to go into a joint venture or short-term partnership, should I go in as an LLC?

[Sean Morrison]

You can't really compare insurance and LLCs. While they're both liability management tools, they operate very differently. Insurance helps protect you from liability, while the LLC helps limit its scope. Insurance, without an LLC, can protect you up to the limit of the policy. But if your judgment goes beyond your insurance limits, then everything you own is potentially at stake. An LLC without insurance provides no liability protection, but does limit the damage just to the assets owned by the LLC.