Limited liability

Question 1

What is unlimited liability

Answer 1

It is when the owners of a business are liable to any debts that the business may have.

Question 2

What is limited liability

Answer 2

The liability of the owners of the businesses to pay off its debts is limited to the amount of money they invested in the business.

Question 3

What types of businesses have unlimited liability

Answer 3

Partnerships and sole trader

Question 4

What types of businesses have limited liability

Answer 4

Private limited companies (Ltd) and public limited companies (plc)

Question 5

what are the advantages of limited liability

Answer 5

It is less risky because you won’t lose personal possessions but the advantage is there are more rules

Question 6

what are the advantages of unlimited liability

Answer 6

There is more freedom you can keep profits be own boss but the disadvantages are that it has more risk because you could lose valuable assets.