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  1. #11
    Join Date
    Sep 2016
    Posts
    24

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Taxing Matters
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    Your personal creditor would not sue your LLC, but it could potentially reach the assets or income of the LLC to pay your debts since the LLC is an asset of yours.
    I'm confused on what you mean here. Could they take directly from the LLC or only the net income of the business? Or what i'm paying myself out of the LLC?

  2. #12
    Join Date
    Oct 2006
    Posts
    15,274

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
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    I'm confused on what you mean here. Could they take directly from the LLC or only the net income of the business? Or what i'm paying myself out of the LLC?
    Its more complicated than that. Its not that they can simply "take" money from anywhere. There is always a process that has to be followed, one way or another. However, in the end, as long as its just you and just your business, the two are going to be intertwined to one extent or the other and therefore never perfectly protected from each other. That is why it's important to have good liability insurance and not just try to rely on the separation between a business and personal assets to protect oneself.

  3. #13
    Join Date
    Oct 2014
    Posts
    7,204

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
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    I'm confused on what you mean here. Could they take directly from the LLC or only the net income of the business? Or what i'm paying myself out of the LLC?
    Under Arizona law, a judgment creditor against you personally may get a charging order against your interest in the LLC. That charging order then makes the judgment creditor an assignee of your interest in the LLC. As an initial matter, that entitles the creditor to all distributions that you would receive from the LLC until the judgment is satisfied. Normally that is the sole remedy that the creditor would have collect for a personal debt from your LLC. But that would mean, of course, that you'd not be able to take out anything from the LLC for yourself until that judgment was paid.

    However, there is one other possibility when the LLC is a single member LLC. Since the credtor becomes an assignee of your interest in the LLC and you are the only member of the LLC, you normally would have the sole power to determine who becomes a member of the LLC. As an assignee, the creditor may be able to then make itself a member of the LLC. See Arizona Revised Statutes (ARS) 29-731 & 732 From there it might then be able to force the LLC to liquidate. That then would cause a distribution of all the assets of the LLC, which the creditor could then get as a result of the charging order. So it would take a few steps to get there, but there is that possibility of reaching the LLC assets to collect a personal judgment. There are ways to set up the LLC to prevent that possibility, and you'd want to see a business lawyer about that.

  4. #14
    Join Date
    Sep 2016
    Posts
    24

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    What are my options? If I start growing my company they will be able to take funds out as soon as they enter the business?

  5. #15
    Join Date
    Feb 2019
    Location
    405 West Front street Bloomington, IL. 61701 USA
    Posts
    4

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    This is a common concern for many clients that operate small businesses. In Illinois, my first questions to business owners asks them the type of business to ascertain the level of risk they undertake. If you are concerned about a risk that has occurred already, then I believe you are to late to do anything about it. If you are working to clean up your operations, starting now with correct accounting and book keeping is a start. In Illinois there is no "bright line" test that will destroy your liability protection through the LLC. There are a multitude of factors that are considered. If you have a new wave of business, or are in a risky business environment then a new LLC would be helpful. the new LLC minght not be required but due to the case by case assessment utilized, the cost may be worthwhile. Discussing this with an attorney in Arizona would provide you direction. Good luck.*

  6. #16
    Join Date
    Sep 2010
    Posts
    19,000

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    There's no line at all when it comes to him being PERSONALLY sued for his PERSONAL debts. The LLC is an asset.

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