Which form of business structure often limits personal liability for its members?

The limited liability company (LLC) is a popular business structure that provides its members with limited personal liability. This means that, typically, the personal assets of the members are protected from the debts and liabilities of the business. In the case of legal judgments or creditor claims, members' personal property—such as homes and savings—generally cannot be pursued to satisfy those business obligations.

This protection is a significant advantage for individuals looking to start a business, as it allows them to take risks and invest in their ventures without the fear of losing their personal assets. An LLC combines the benefits of pass-through taxation, where business income is reported on the members' personal tax returns, with limited liability features similar to those of a corporation.

In contrast, other business structures like general partnerships, sole proprietorships, and corporations have different implications for personal liability. General partnerships expose partners to personal liability for all business debts, while sole proprietorships do not provide any liability protection to the owner. Although corporations do limit personal liability, the complexity and regulatory requirements of establishing and maintaining a corporation can be more burdensome compared to the relatively simpler structure of an LLC.