Corporate structure is very important because it helps limit liability. This is a big reason why people choose to start a corporation.

When you create a corporation, it becomes its own legal entity.

This means that the business is responsible for its own debts and obligations, not the individual shareholders.

Key Points on Limited Liability:

1. Separation of Entities:

   • The corporation is separate from its owners. If the corporation has debts or gets sued, the shareholders usually only risk the money they put into the company. They don’t risk their personal belongings.

2. Protection from Personal Liability:

   • Imagine you have a retail business formed as an LLC. If a customer slips and falls, they can sue the LLC. However, they can’t take the owner’s home or personal savings.

3. Piercing the Corporate Veil:

   • Sometimes, courts might ignore the limited liability protection if the corporation is used incorrectly. For example, if personal and business money is mixed together, it can lead to problems. This idea is called "piercing the corporate veil." It shows why it’s important to follow the right rules for running a corporation.

In short, a well-structured corporation helps it grow and look trustworthy. It also protects against serious financial problems, as long as it follows the law and acts ethically.