Additional excise or business-related taxes may be imposed in some local political jurisdictions. In fact, whether through conscious choice, failure to consider alternatives or the refusal to spend money for professional advice, many businesses begin as proprietorships by default. In a proprietorship, you'll face unlimited personal liability. All personal and business assets are at risk for business liabilities, regardless of whether used in the business or not. You and your business may be ineligible for tax-free fringe benefits that are available to more formally organized businesses.
Creditors can try to collect only the assets contributed to the business.