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Why does a corporation have limited liability?

Limited liability is a type of protection for your personal assets. It ensures that your personal liability for the business debts and obligations is no more than the amount of money you invested in the business.

What is the downside of an LLC?

Disadvantages of creating an LLC Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of States office.

Do you have limited liability in a corporation?

Both corporations and LLCs are limited liability entities. This means the owners arent personally liable for business debts or lawsuits against the business. Business owners do, however, remain liable for their own negligence and for any obligations on which theyve signed a personal guarantee.

What is a good reason to form a limited liability corporation?

Limiting your personal liability for business debts. The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC.

What are the 4 main types of businesses?

The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation.

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