In what form of business structure are owners not personally liable for debts?

In a limited liability company (LLC), owners, referred to as members, enjoy the benefit of limited liability, meaning they are not personally responsible for the debts and liabilities of the business. This structure is designed to protect the personal assets of the members from business obligations and legal actions. Consequently, if the LLC incurs debt or faces a lawsuit, the members' personal assets, such as their homes and savings, are typically safeguarded from being used to satisfy business debts.

The LLC combines features of both corporations and partnerships, offering the liability protection often associated with corporations while allowing for a flexible management structure akin to that of partnerships. This makes it an attractive option for many business owners who want to mitigate personal risk while still benefiting from the operational simplicity of a partnership.

In contrast, in a sole proprietorship, the owner is personally liable for all debts and obligations of the business, meaning personal assets may be at risk. Similarly, in a general partnership, all partners share personal liability for the business's debts, which can expose their personal finances to significant risk. Therefore, the limited liability company is distinctly advantageous for owners seeking protection from personal liability.