Question

Your sister formed her business as an LLC to protect herself from personal liability. At the same time she opens her business, the economy takes a dive and her business fails with many business debts remaining. Which of the following circumstances would make your sister personally liable for her business's debts?

A-She signed documents personally securing the debts of the business.
B-She did not have sufficient experience to make good decisions on behalf of the business.
C-She defaulted on her loan from the Small Business Administration.
D-Customers did not buy the goods that her business produced and now she must pay back her suppliers.

Answer 1

A-She signed documents personally securing the debts of the business.

Step-by-step explanation:

When you form a business as a LLC that protects you from liability in case of debt when the business goes into bankrupcy, that protects the owner from having to put their properties as collateral for the bankrupcy, the only way in which your sister could be personally liable for her business debts is if she signed personally for the business debts.