As a stockholder in a corporation (but not an officer or member of the board of directors) your liability is limited to your investment. In a partnership you ha

As a stockholder in a corporation (but not an officer or member of the board of directors) your liability is limited to your investment. In a partnership you have unlimited liability for work related activities of your partners. In a C Corp, S Corp, or LLC your liability is limited to your investment as long as you are not an officer or director. The worst case scenario is that you lose whatever money you have given your friend in exchange for the equity. I am not an attorney, this is not legal advice.