ABA Family Legal Guide

Forming and Operating a Small Business

Types of Business Organizations

Why is protection from personal liability so important?

Because you want to put as few of your personal assets at risk as possible. If the structure of your business does not protect you personally from lawsuits, then you might be liable for big personal injury damages if your firm is successfully sued, or you might be personally liable if your firm defaults on a loan. You might lose your home, your car, your brokerage account--everything. Some ways of organizing your business protect you from such catastrophes.