Liabilities

• Limited liability =Owners (shareholders) of private limited companies and public limited companies can only lose the original amount

  - They invested in the business if it fails shareholders are only liable for the amount they have invested in the business
• Unlimited liability = the business owner or owners are personally responsible for all of the debts of the business, no matter what the value
• Implications of unlimited liability:

  • There is no legal distinction between owners with unlimited liability and the business
  • As a result, these business owners may have to use their own  personal assets to pay debts or legal fees
• Implications of limited liability:

  • Companies are  incorporatedand owners are considered a separate legal entity to the business 
  • This means that if a company fails, the owners would lose their investment (shares) but would not have to use their assets to meet additional debts or legal fees
• Appropriate finances for a limited liability:

  • Retained profit
  • Debentures
  • share capital
  • venture capitalists
  • business angles
• Appropriate finances for a unlimited liability:

  • Personal savings
  • grants
  • crowd funding
  • P to P lending
  • trade credit
  • overdraft