Liability and Finance Flashcards
1
Q
What is unlimited liability?
A
Responsible for any debts = business debts become the personal debts of the owner.
Business owners can be forced to sell personal assets like their house to pay off business debts.
2
Q
What is limited liability?
A
Owners aren’t personally responsible for the debts of the business.
Shareholders of both Private and Public limited companies have limited liability because a limited company has a separate legal identity from its owners.
The most the shareholders in a limited company can lose if the company fails is the money they have invested.
