What is limited liabilty?
Limited liability is a principle of business law which shields the owners of a business from the business's liabilities. Owners of a business which has limited liability may lose only what they have invested in the business, meaning creditors cannot reach to the owner's personal assets to cover the businesse's debts. If a business is sued or goes bankrupt only the assets of the business may be used to cover the debt, a stockholder may not be forced to sell their home or other property to cover their share of the company's debt. Businesses that have limited liabilty are corporations, limitied liability companys (LLC) and limited liability partnerships (LLP).
In a business that is a sole proprietorship or a partnership the owners are personally liable for the business's debts.
Additional Business Law FAQs
- What are the advantages of forming a Corporation?
- What steps should I take to start a business?
- What is Redemption?
- What is the Retail Installment Sales Financing Act?
- Do I need to develop terms and conditions for my business website?
- What is equity financing?
- What steps are required to form a corporation?
- What steps are required to form an LLC?
- How can I collect money that is owed to me by my customers?
- I want to do business online. Do I need to charge state sales tax?
- What is debt financing?
- Does a contract have to be in writing in order to be enforceable?
- Do I need a license / permit to open my business?
- What benefits must I legally provide to my employees?
- Do I Need a Taxpayer Identification Number for my Business?
- What are the advantages of organizing a business as a Sole Proprietorship?
- What is a C Corporation?
- What is an S Corporation?
- How often do I need to pay taxes?
- What are the advantages of a limited liability company (LLC)?
- Do I need business insurance?
- What are the advantages of a limited liability partnership (LLP)?
Business Law Sub-categories
Uniform Commercial Code