Unlimited Liability Corporation - ULC

A limited liability company is meant to do just what its name implies: limit liability. You invest $1,000 in an LLC. You can only lose that $1,000. If the LLC goes bankrupt, its creditors can't come after your house and your BMW to try to collect.

As you might guess, the unlimited liability corporation doesn't have this cap. The creditors can go after the investors to collect debts. There's no limit in place.

The structure exists under Canadian law. You're probably asking yourself at this point, "Why would someone choose an unlimited liability when they could have their liabilities limited just by filling out some different paperwork?"

Good question. Because Canadians are nice and believe in paying all their debts, even if it means financial ruin? No...not even Canucks are that nice. Actually, the ULC structure comes with some tax advantages that can make it sensible in some circumstances.