After Formation, Always Be Sure You Let Others Know it is the LLC Conducting the Business

The Colorado Limited Liability Company has been the entity of choice for small business owners in Colorado for over a decade now.  The number of new LLC formations in the state grows significantly each year.

While this legal entity provides many advantages and benefits for operating a business, the most popular reason business owners choose it is because it is a simple way to obtain personal liability protection.

The Colorado LLC laws have explicit provisions granting this protection but sometimes Colorado courts have found members of a Colorado LLC liable despite having the LLC in place.  Read on to learn one important factor to always comply with when operating your Colorado LLC business.

Form a Colorado LLC in 2 Business Days

ALWAYS MAKE CLEAR IT IS THE LLC AND NOT
YOU PERSONALLY THAT IS OPERATING THE BUSINESS
 

In a 1997 court case in Colorado, the court ruled that a member of a Colorado LLC would be personally liable for a business obligation despite the fact that such member had properly formed a Colorado limited liability company and despite such entity being in good standing.

The reason for this is because when the member was working for the LLC on LLC business, he did not disclose to the other parties involved in the business transaction that it was the limited liability company that was the entity conducting business.  He needed to make this more clear and emphasize that he was merely an agent of the company.

Basically, the court ruled that any members who are active in operating and managing the Colorado LLC business must fully disclose the LLC status.

The lesson here for any small business owner in Colorado is to always be clear, not only in your contracts and on your business cards, but also in any business discussions and meetings, that the business you are representing and working on behalf of is a Colorado LLC and not you personally acting as as sole proprietor.

Another important pointer is to ensure a proper and complete LLC formation because a defect in the organization process could possibly invalidate your LLC which can cause personal liability.

When starting an LLC Colorado, ColoradoBusinessFormation offers the fastest and complete service to forming a Colorado LLC , backed by a 100% compliance guarantee.