There is a rumor going around that if you incorporate your company or form an LLC, you’re safe from courts. Well, no one says what you are safe from. Corporations have very specific formalities that must be observed to limit your liability. Persons that select the LLC form of business do as well though not as strict as those imposed on corporations. If you do not required formalities the court can choose to say you were operating as a proprietorship and deny your limited liability status. Even if your business was incorporated.