What’s a limited liability entity (LLC / Corp)?

I already have a DBA & a clever name for my distillery. I’m set.

Congratulations on coming up with a unique name for your distillery (or brewery or winery)! That can be a difficult and frustrating process, especially when you’re trying to find the perfect embodiment of your business. After celebrating, you probably went out and filed the paperwork for “White Russian Nesting Dollstillery” with the appropriate county to obtain a DBA, or fictitious business name. That’s great and important. But if your intent was to have protection like an LLC or corporation, then you’re out of luck.

What you wanted to was to create a limited liability entity, but what you got was a name. What’s in a name, oh Romeo? Not much if what you wanted was an LLC/corp. A limited liability entity is a company with a legal identity separate from its owners and the owners are subject only to limited liability (hence the term).

But what does “limited liability” mean? It means the owners are only responsible for limited acts, like intentional tortious conduct. But if a limited liability entity, like a corporation, gets sued for breach of contract for example, then the owners are insulated. At the risk of sounding circular or redundant, or even repetitive, I’m not sure which, corporations and LLCs limit the owners’ liability to specific behavior (e.g., breach of fiduciary duty, criminal activity, etc). So, a limited liability entity is an entity that has limited liability. Beautiful!

The most important point is that this entity has to be created at the state level, not county or local level. Typically, you will file articles of incorporation or organization with your respective secretary of state. The “articles” are essentially your company’s birth certificate and the state in which it is filed is your company’s home state. This is the bare minimum requirement, so that DBA filing doesn’t do the trick. If what you want is to protect the owners from the potential or existing liability of the company, then you might consider a corporation, LLC, or some other limited liability entity — don’t settle for just a name.