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This is a deceivingly simple and dangerous assertion. Some people form a GmbH/UG as a sole owner/ceo with the goal that it shields them personally from liabili

This is a deceivingly simple and dangerous assertion. Some people form a GmbH/UG as a sole owner/ceo with the goal that it shields them personally from liability, but never intend to take on investment or have employees. Personal liability tends to creep in in a lot of places, piercing the shield. Many rental contracts for example will stipulate a personal liability for the owner/ceo in such a case. A credit line for the company might as well, even something as simple as a credit card for the company does. The CEO is personally liable for quite a few things that are not as clear cut as it seems at first glance: You may be liable for correct tax filing and in taxes, many things are judgment calls with a thin line between what's considered a valid way to reduce taxes and tax fraud. Personal liability may creep in from declaring insolvency too late in the hope that the next contract will save the company. Haven't filed the taxes because you need to bring in money? Company can't pay the taxes right now? A common thing when companies go down, but personal liability. It might creep in by entering contracts that the company cannot reasonably fulfill and the CEO should have known, but looked the other way because they hoped that things will just work out fine. True, if you did everything lawfully, then you're probably shielded, but despite best efforts, most people and companies slip up sooner or later. There are many reasons to form an LLC, but the hope of shielding yourself personally as a single developer/consultant is often in vain.

hobofan 9y ago
I didn't mean to make it sound simple. Thank you for expanding on that. The ones dictated by law are certainly tricky, because those apply to you by default and you might not know about them. I wouldn't throw credit line/rental into that same mix though, since those are contracts you enter willfully and those contracts explicitly state that you are personally liable if the company can nlt meet its obligations.
- Xylakant 9y ago
  The ones you contractually enter into are certainly more obvious in hindsight (and easier to avoid by just not having a credit line for example), but I'd still throw them in the same mix because people do not think of those when they plan to form an LLC. My general point is that personal liability in small companies tends to creep in through the cracks one way or another.

hobofan 9y ago

I didn't mean to make it sound simple. Thank you for expanding on that. The ones dictated by law are certainly tricky, because those apply to you by default and you might not know about them. I wouldn't throw credit line/rental into that same mix though, since those are contracts you enter willfully and those contracts explicitly state that you are personally liable if the company can nlt meet its obligations.

Xylakant 9y ago
The ones you contractually enter into are certainly more obvious in hindsight (and easier to avoid by just not having a credit line for example), but I'd still throw them in the same mix because people do not think of those when they plan to form an LLC. My general point is that personal liability in small companies tends to creep in through the cracks one way or another.