To clear up some misconceptions: An ownership interest in the LLC (and its share of assets) is always at risk for the member's personal liabilities just like a

To clear up some misconceptions: An ownership interest in the LLC (and its share of assets) is always at risk for the member's personal liabilities just like any assets of an individual debtor. LLCs merely afford liability protection against personal liability for the company's debts. A pass-through LLC MUST file a tax return and issue Schedule K-1s to the partners (a pass-through LLC is considered a partnership by the IRS) so they can pay their taxes, even though the LLC does not pay taxes itself. You must also file a California state tax return to report payment of the $800 annual minimum franchise tax. It is correct that just filing the papers and paying the fees to the state does not constitute proper LLC formation. An Operating agreement must be executed and other formalities completed. There's something like an 11-point test for disregarding a corporation and any one them can bring personal liability. Forming an LLC can be done yourself, but research it, and follow the rules closely. The key is to keep the LLC as a separate entity and not to overlap or commingle your personal assets and the assets of the company. If you do everything for the company as you would do for another person, such as separate address and phone number, bank account, etc., you should be fine.