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Can I file for LLC if I'm already being sued? California

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  • Can I file for LLC if I'm already being sued? California

    Can I file for LLC if I'm already being sued? I run a daycare out of my home . I have a state license and everything. I am being sued by a client who had their child at my daycare. Can I file for an LCC now or do I have to wait until the lawsuit is done.

  • dkstaub
    replied
    Alice is absolutely correct. You can certainly set up an LLC but it won't limit your personal liability for any actions that created personal liability prior to the formation of the LLC.

    In addition, you should understand that while an LLC does generally limit the liability of members of the LLC to the amount of their investment (i.e., no personal liability for simply being a member), it does not limit the liability of any person for their own actions or failure to act.

    What that means, for example, if you have a daycare facility and you are the only worker, anything that the business does necessarily means that YOU did it. If a child is injured in your care, then any allegation that your business was careless means that they are alleging that you were also careless.

    Even if you have an employee who was the one who directly caused a harm, the injured party will often sue the owner personally, arguing that the owner was either negligent in hiring or supervising the employee. That is often a more difficult case to prove, but suing and proving liability are 2 different things. It is fairly easy to sue someone.

    While I strongly recommend an LLC for a business like yours, you do need to understand that it does not provide a perfect shield against all liabilities. For more information see How Limited is Limited Liability?.

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  • Alice Dodd
    replied
    You can file for an LLC now, but it won't protect you from acts or claims that occured prior to LLC formation. Check out Nolo Press's book on LLCs.

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