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You Formed a Business to —Stop Personal Risk —
So Why Are You Still Guaranteeing Everything?

Because legal separation, federal tax classification, and risk assessment are three different systems — and most people are only taught one of them.

IRS definitions and federal classification rules explain why forming an LLC or electing S-Corp status does not automatically eliminate personal guarantees or personal exposure.

Educational framework only. Not legal or tax advice.

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What the IRS Actually Means by “United States Person”

  • The IRS defines a “United States person” to include individuals and domestic entities, including domestic corporations and partnerships.
     

  • This definition is used before tax elections or reporting methods are applied.

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  • This is why forming an entity does not automatically remove personal guarantees or personal evaluation.

Source: IRS Form W-9 Instructions — Definition of “United States person”

Classification of taxpayers for U.S. tax purposes | Internal Revenue Service

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