It protects from liability incurred through or because of the LLC *from the moment it is created forward*. It does not have retroactive effect. Example: you create an LLC for a catering business you are creating. The LLC signs a contract the day it is created and then defaults on it--your personal assets are protected. But if YOU signed the contract prior to creating the LLC and default, the LLC offers you no protection, since it did not exist when you took on the contractual obligation.