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 Virginia, the extent of personal liability for business debts is largely determined by the legal structure of the business. If the business is incorporated as a corporation or formed as a limited liability company (LLC), the owners typically enjoy limited liability, meaning they are not personally responsible for the business's debts. This protection is a fundamental principle of these business entities. However, personal liability may arise if an owner personally guarantees a debt or if there are instances of fraud or failure to adhere to corporate formalities, which can lead to 'piercing the corporate veil.' On the other hand, if the business is operated as a sole proprietorship or a general partnership, the owners are generally personally liable for all debts of the business. This means that personal assets can be used to satisfy business debts and obligations.