Does forming an LLC actually protect my personal assets from business lawsuits?

An LLC creates a legal separation between you and the business, so in most cases creditors can pursue only business assets, not your house or personal savings. But that shield has holes. Courts can 'pierce the corporate veil' if you commingle personal and business money, fail to keep records, or undercapitalize the company. You also stay personally liable for debts you personally guarantee, for your own negligence or malpractice, and for unpaid payroll taxes. An LLC does not replace liability insurance; the two work together. To keep protection intact, use a dedicated business bank account, sign contracts in the company's name, and maintain basic corporate formalities even as a single-member LLC.