Personal Liability Companies (Inc)

A personal liability must end with the word “Incorporated” (Inc), which meets the criteria for a private company. The directors and previous directors are equally and legally responsible together with the company for any debt and liabilities of the company that were contracted during their respective terms of office. A Personal Liability Company is a private company used mainly by professional associations.

Advantages of a personal liability

  • Limited Liability organizations, provides security for their owners. If the organization has outstanding debts, the individual owners will not be held accountable for those debts. If the organization has to file insolvency the individual owners are still not personally accountable for any of the liabilities that the organization has.
  • Taxation is not doubled. Taxes on your corporate profits are not payable, as well as on profits that pass through to your members. Taxes are only paid once, on those profits that are given to individual members
  • Owners can choose to have profits distributed to them any which way they would like them to be distributed. Whatever percentage of profits they want to give to each member, they have the freedom to do so.

Disadvantages of a personal liability

  • New challenges in terms of the way that your organization files taxes are face daily. Selecting the sole proprietorship format would be the easiest to complete but that may not always be an option. This status may be automatically chosen for you
  • Prolonged existence of the company is based on the life of the members. The company will no longer exist if a member goes bankrupt or passes away.