Legal Question in Business Law in California

Re: Home Occupation Permit

I'm not sure what you mean by a "home occupancy permit", but it sounds like something that is required by local zoning laws. I doubt that it will have any impact of protecting your home from creditors of the LLC.

Creditors of an LLC or corporation generally cannot go after the members or shareholders. But there is a doctrine under the law called alter ego liability where courts can "pierce" the protective veil that shields the owners from the creditors.

In general, the two requirements for applying the alter ego doctrine are that (1) there is such a unity of interest and ownership between the corporation and the individual or organization controlling it that their separate personalities no longer exist, and (2) failure to disregard the corporate entity would sanction a fraud or promote injustice. What does that mean in plain engish? Make sure you have good legal counsel to guide you in following all the rules of operating your corporation or LLC and keep all of your personal assets and accounts separate from the LLC.

You have two basic types of creditors: voluntary and involuntary. Voluntary creditors are mainly business creditors or people who choose to do business with you. Owners of corporations or LLCs get the most protection from these creditors because they could always request a personal guarantee of the debt from you. You get less protection from involuntary creditors like accident victims, but that is why you need insurance.