Limited and unlimited liability

• What does limited liability mean for business owners?

  Owners are only responsible for debts up to their investment
• What types of businesses typically have limited liability?

  Private limited companies
• How does unlimited liability differ from limited liability?

  Unlimited liability means personal responsibility for all debts
• What is the main risk associated with unlimited liability for business owners?

  Personal assets can be taken to cover business debts
• What are the implications of limited and unlimited liability for business owners?

  • Limited liability:
  • Protects personal assets
  • Owners liable only up to investment
  • Unlimited liability:
  • Personal responsibility for all debts
  • Higher risk for owners
• What does the abbreviation 'Ltd' signify in a business name?

  It indicates a private limited company
• What is a creditor in the context of business?

  A person owed money by a business
• What is the definition of a debt in business terms?

  A sum of money owed to another party
• Why might a business owner choose to have limited liability?

  To reduce personal financial risk
• What factors influence the choice between limited and unlimited liability for a business?

  Business size, number of owners, risk tolerance
• What is one key feature of a private limited company?

  It has limited liability for its owners
• What does it mean for a business to have 'unlimited liability'?

  Owners are liable for all business debts
• How does the level of risk differ between limited and unlimited liability businesses?

  Unlimited liability carries a higher risk for owners