The Shielding Power of Corporations

A company is legally a separate person, with a forcefield to protect its assets from YOUR personal

problems. We all know about "limited liability"—if the company racks up debt,

creditors can't come for your house. Your risk is limited to your investment. But the flip side

is even more interesting: "entity shielding." This protects the company's assets from *your* personal

creditors. If you personally go bankrupt, they can't just seize the company's

cash to pay your bills. This two-way wall is what makes a company's value

stable and its shares tradable, no matter who owns them. It's not just about

protecting you from the business; it's about protecting the business from you.