One of the things that’s a reality is that business is risky. But one of the ways to reduce that risk is to form an LLC, a Limited Liability Company. Yes, that’s right – it basically means Reduce Your Risk Company. It is especially helpful if you have any type of assets. That is why Happy Apps is really Happy Apps LLC.

(Disclaimer: I’m not a lawyer neither do I play one on TV.)

On the other hand, if you start doing business and don’t start an LLC or some sort of corporation, then you are by default known as a Sole Proprietor or a Partnership (if there’s more than one of you). This means that your assets are the company’s assets and vice-versa, also known as unlimited personal liability.

Let’s put it in a way that Mac enthusiasts would understand:

If the LLC was available 30 years ago back in 1976 when Apple was founded, then we might have remembered Ron Wayne. Who is Ron Wayne? He is the long-forgotten third founder of Apple. According to Woz, Ron was worried about owing money for computer parts which they were using to assemble the Apple Is which were basically pre-assembled motherboards. He had some “gold hidden in his mattress” that he was worried about. Sadly, he sold out his 10% share of Apple for a pittance ($800). [Note: 10% of Apple is now worth around $5.6 billion.]

So what would have been different if Steve Jobs, Woz, and Ron Wayne had founded Apple Computer LLC? An LLC is another entity apart from the “members” of it. It owns assets and has liabilities just like a person would. So Ron, being the money man, could have put in say $3000 or however much it cost to make a few batches of Apple Is and other operating expenses. And then he could sleep soundly on his gold-stuffed mattress because even if for some reason the Apple Is didn’t sell, the only thing that they would lose would be that $3000.