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Comment by jforman | Hacker News Reader

IANAL, but some basic details:

There needs to be a strict separation between the corporation and the people behind the corporation. As part of this, the LLC's finances need to be kept rigorously firewalled from personal finances — never pay a corporate bill from your own pocket, for example, or vice-versa.

You also need to follow the formalities of a corporation by keeping formal records (minutes, shareholder acts, etc.).

If you fail to do either of these things you, in addition to the LLC, can be sued, and you can lose personal assets. It's called 'piercing the corporate veil'. A great run-down is here:

http://www.nolo.com/legal-encyclopedia/personal-liability-pi...

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> There needs to be a strict separation between the corporation and the people behind the corporation. As part of this, the LLC's finances need to be kept rigorously firewalled from personal finances — never pay a corporate bill from your own pocket, for example, or vice-versa.

This is true about all formal business structures. They should always be separate from your personal finances.

> You also need to follow the formalities of a corporation by keeping formal records (minutes, shareholder acts, etc.).

Not true. LLCs do not require the record keeping that corps require. The only formal records you need to keep are contracts / member & manager agreements.

> This is true about all formal business structures. They should always be separate from your personal finances.

This is more than "should." In an LLC, co-mingling finances can expose you to personal liability, which can result in personal financial disaster if you get sued.

> LLCs do not require the record keeping that corps require

We're both sort-of wrong on this one: the LLC record-keeping burden is far lower than a corporation, but the burden is not strictly limited to your list:

http://www.nolo.com/legal-encyclopedia/llc-record-keeping-ru...

...in general, the law is much more complicated than one would expect. If you want to be safe, you should either be spending time reading NOLO's documentation or money paying a lawyer.

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