In short, yes, it can. If another party files a lawsuit, they can come for the LLC but may not breach one’s personal assets if handled properly. This is different from many other states that do not recognize a single-member LLC as a business, keeping the owner from these protections.
Another way Nevada benefits single-member LLCs is in what’s called charging order protection. In other states, if another party filed a lawsuit, they could take a voting share within the company and liquidate the asset in order to pay for their damages. This is not the case in Nevada, though obviously the judgement is still present.
Being cautious in making moves
While Nevada does offer this benefit to single-member LLCs, it’s important to be cautious about moving assets into the LLC. If another party files a claim and then the business owner makes a transfer, it could draw accusations of trying to defraud creditors. It may just be a case of bad timing. The transfer may revolve around planned investments for one’s business, but nonetheless one will need to make a strong case.
One thing to note is that while assets put into an LLC generally receive protection right away, business owners will need to complete certain tasks to keep their operations compliant.
These steps can include:
- Proper filing with the state
- Keeping a license active
- Doing one’s annual minutes
While this opportunity can look like an appetizing one, it can be crucial to reach out to a legal professional who has knowledge in the procedures and regulations of setting up an LLC.
The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.