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 New Mexico, 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 business fails to maintain the formalities required for limited liability protection, leading to a 'piercing of the corporate veil.' 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. This means that creditors can pursue the personal assets of the owners, such as homes, cars, and personal bank accounts, to recover business debts.