Limited Liability
The term “limited liability” refers to the legal protection that shields the owners of a business from being held personally responsible for the debts and liabilities of the company. In other words, if a company is sued or incurs debt, the owners’ personal assets are usually protected from seizure.
There are several types of business structures that offer limited liability protection to their owners, including corporations, limited liability companies (LLCs), and limited partnerships. Each type of entity has its own advantages and disadvantages, so it’s important to choose the right one for your business.
For many small business owners, an LLC offers the best combination of personal asset protection and flexibility. LLCs can be organized as either sole proprietorships or partnerships, and they offer pass-through taxation, which means that profits and losses are not taxed at the corporate level. This can save you money on taxes and accounting fees.