Whether you have personal liability for the debts of your business (are personally liable) first depends on the form of entity in which you are operating your business. If your business is structured as a corporation or as a limited liability company (LLC), you will generally not be personally liable for the debts of your business—unless the creditor (bank, lessor) requires you to personally guarantee the loan, line of credit, credit card account, or equipment lease you use for your business. But if you are operating your business as a sole proprietorship or as a general partnership, you generally will have personal liability for the debts of your business.
In Texas, the extent of personal liability for business debts largely depends on the legal structure of the business. If the business is incorporated as a corporation or formed as a limited liability company (LLC), the owners, known as shareholders or members respectively, are typically not personally liable for the business's debts. This means that creditors can only pursue the assets of the corporation or LLC to satisfy business debts. However, personal liability may arise if an owner personally guarantees a debt or if the corporate veil is pierced due to fraudulent or improper conduct. On the other hand, if the business is operated as a sole proprietorship or a general partnership, the owners are personally liable for the debts of the business. In these cases, personal assets can be pursued by creditors to satisfy business obligations. It's important for business owners to understand the implications of their business structure and to consult with an attorney to ensure they are adequately protected from personal liability.
