Is it true that a single-member LLC does not give you the same protection of a regular LLC?
Yes.
BLL, can you elaborate on that please.
No charging order protection in bankruptcy.
Can someone please give an example/illustrate some specific differences (other then filing a tax return for an LLC vs. not filing for SMLLC) Thanks!
I just did. What don’t you understand?
What does this mean?
You really have quite a bit to learn about LLCs before you can understand the difference between the multi-member and single member LLCs.
Charging order protection is a concept that basically means you shouldn’t have to pay for someone else’s mistakes. If your partner owes someone money, that creditor is entitled to any non-exempt assets, including any businesses he owns. Unfortunately, you are harmed if the creditor replaces the partner. The creditor doesn’t care about the business or you and your family. He wants to liquidate the partnership to get the cash. Even if he had the best interests of the business in mind, he may lack the skills and resources that the debtor partner brought. To avoid harming the other partners who were not involved with the case against the debtor partner, the creditor is limited to a charging order. He gets any distributions that partner would get without any say in the operation of the business. Business goes on as usual, except the debtor gets nothing until the creditor is paid.
In the case of a SMLLC, there are no other partners to be harmed and the court ruled the LLC could be liquidated to satisfy the creditors. Bankruptcy is relevant because it only takes a $12,000 judgment to force you into involuntary bankruptcy.