Forming and managing a Limited Liability Company (LLC) requires strict adherence to legal and operational formalities to protect personal liability and maintain corporate status. A major mistake business owners make is failing to draft or execute a comprehensive operating agreement, relying instead on state default rules that may not align with business goals. Other frequent errors include commingling personal and business finances by using a single bank account, neglecting to file annual state reports or pay required franchise taxes, and failing to maintain proper corporate records such as meeting minutes and member resolutions. Additionally, improperly signing contracts without indicating official LLC title status can pierce the corporate veil, exposing personal assets to creditors.