Unlimited Liability Corporation - ULC
Categories: Incorporation
A limited liability company is meant to do just what its name implies: limit liability. You invest $1,000 in an LLC. You can only lose that $1,000. If the LLC goes bankrupt, its creditors can't come after your house and your BMW to try to collect.
As you might guess, the unlimited liability corporation doesn't have this cap. The creditors can go after the investors to collect debts. There's no limit in place.
The structure exists under Canadian law. You're probably asking yourself at this point, "Why would someone choose an unlimited liability when they could have their liabilities limited just by filling out some different paperwork?"
Good question. Because Canadians are nice and believe in paying all their debts, even if it means financial ruin? No...not even Canucks are that nice. Actually, the ULC structure comes with some tax advantages that can make it sensible in some circumstances.
Related or Semi-related Video
Finance: What is an LLC?4 Views
finance a la shmoop. what is an LLC? LLC no that's not a rapper, that's a limited
liability company or look as professionals in the business pronounce
it. well why do you want one? because limiting your liability is a [man explains]
good thing if you're the one potentially liable for that stooge who slips on a
banana peel in your lobby waiting area and then Sue's you and wins. if you start
building your own company as an individual and not as an LLC and you get
sued for whatever, and you lose well you could lose everything you own.
that is the lawyers will come after your house your car your poodle your signed
Mila Kunis photograph collection, and legally well they'll be entitled to take
all of it. if you have existed under the legal structure of an LLC however, well [legal structures pictured]
the most you can be liable for is the assets of the business itself. yes
they'll take the company computer the remaining 17 months of lease on the
company building, and all your staplers and posted thingies but legally they
won't be able to go after your home your car your poodle or your autograph
collection. Mila is safe whew. so LLC's are a good thing they cost only a few
hundred bucks to set up these days, hi LegalZoom. so before you start up a lava
lamp company of your own think about setting up an LLC first. Mila and your [lava lamps in a row]
poodle gregory will thank you for it.