Which business form provides protection from personal liability?

• A. Joint venture
• B. Limited liability company
• C. Sole proprietorship
• D. Unincorporated association

Answer: (B)

The protective shield for personal assets comes from using a form that creates a separate legal entity with limited liability. An LLC does exactly that: it’s a distinct legal entity, and the owners (members) are typically not personally liable for the business’s debts or lawsuits. This means your personal assets are generally protected if the business runs into trouble, as long as you keep business and personal finances separate and you don’t personally guarantee loans or engage in fraud that could pierce the shield.

A sole proprietorship lacks this protection because there is no separate entity between you and the business; you are personally responsible for all debts and obligations. An unincorporated association isn’t a separate legal entity either, so members can be exposed to the group’s liabilities. A joint venture is a collaborative arrangement; unless it’s set up as a separate entity (like a corporation or LLC) or properly structured as a partnership with limited liability, participants can face liability for its actions.