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Personal Liability of Owners

Sole Proprietorship: All personal assets are available to creditors to satisfy claims against you. Generally this does not mean creditors can sell your home if it jointly owned with a spouse, as your spouse is not liable for your business debts.

Partnership: If one partner is disabled, the other may be able to fill in until the disabled partner recovers. One partner cannot sell his/her share in a partnership without getting the consent of the other partner(s). Death dissolves a partnership automatically. Heirs for a partner inherit his/her share of the partnership assets. Without a partnership agreement the heirs often have to sue to enforce their legal rights.

Corporation: A corporation is a separate legal entity. Its existence is not affected by death or disability of shareholders. Share of stock can be sold if one owner wants to leave the business. On the death of a shareholder, the stock goes to the shareholder's heir.