Owners often choose to form their businesses as corporations or limited liability companies under New Jersey business law. The case of Colonial Records Storage, LLC v. Simpson, where a creditor tried to get individual liability against a lawyer who was a shareholder in a law firm operating as a corporation, illustrates exactly why.
The law firm of Stein Simpson & Rosen was a New Jersey professional corporation; Nancy Simpson was an attorney with the firm and was a shareholder, or owner. A professional corporation operates under the same rules as a regular corporation, except that a professional corporation provides professional services such as those of lawyers, doctors, etc., and the shareholders may be personally liable for professional negligence, or malpractice in the course of providing those professional services. The law firm went out of business, although it had not formally dissolved. Simpson retired.