While there are a lot of reasons for forming a corporation or an LLC to operate your business, for most people, the top reason is probably to limit your personal liability as owner-operator.  Many small business owners are surprised to find out that forming a corporation or an LLC is not an impenetrable shield against personal liability.  In fact, the small business corporation or LLC is more of a “screen” than a “shield”.  As such, you need to carefully maintain your corporation or LLC to maximize its effectiveness as a shield against personal liability.  Furthermore, you should view incorporation as just one element in the risk management plan for your business and your investment.