How can I protect myself from liability?
Liability is a major concern for many business owners, especially for larger business which have a lot of risk. The cause for concern is that without some type of protection, you can be personally liable for your business’ debts and losses as a business owner. To help protect yourself from such liability, you can choose to organize your business as a corporation or a limited liability company, which offer some protection to the business owners (limited partnerships are also an option, although they will not help you if you are going to be actively involved in running the business).
You have to be careful however, even with a corporation or LLC, as the liability protection is not absolute. Business owners are still liable for things they do which are separate and apart from the business. In addition, the protection of limited liability can also be lost as a result of the legal theories known as alter ego liability and piercing the corporate veil. To help avoid having these legal theories applied, you should make sure that you set your corporation or LLC up properly, in accordance with the relevant state laws, and work to keep your company in good standing.