What is Limited Liability?

Without the limited liability that a corporation provides, the personal assets of the owners of a business are fully exposed and liable for any debts, lawsuits, claims, contracts, loans, accidents, and any other liabilities of the business.

Without a corporation, if a product produced by the business ends up causing a serious personal injury, the injured person can sue not only the business, but also the owners of that business, personally.

Without a corporation, if an employee of the business gets into a car accident while driving on company business, not only can the injured person sue the business, but they can also sue the owners of the business, personally.

If the business breaches a contract, its owners are personally liable unless the business is incorporated.

If a corporation has borrowed money and cannot pay it back, the owners of the business have no responsibility to pay it back out of their personal assets. But, if the business were not incorporated, the lender could go after the owners' bank accounts, securities, and even their homes, to get paid back money that was lent to the business.