Small business owners are at higher risk of being held personally responsible for business debts.
The liability protection that comes with LLCs and corporations means that the business owner does not have to pay out of their own pocket when the business can't pay its debts.
But a business's creditors can dip into the owner's pocket by asking a court to "pierce the corporate veil." This happens more often than people think.
A legally healthy business has naturally strong liability protection.