19 ownership and liability

• limited liability is where shareholders don't have to repay the company's debts. the losses of the shareholders are restricted to the money they invested.
• unlimited liability is where the owner of a business is personally responsible for all debts of the business, and may have to give up possessions to pay up.
• to achieve limited liability a business must be started up as a company. then, the business has a private limited company status
• benefits of becoming a limited company:

  • can have stare capital, making it easy to divide up ownership between investors. as long as the founder keeps 51% of the business, they still have control
  • if the business needs to raise more capital, it is easy to sell more shares to other investors
  • business continues to exist after founder dies
  • owners or shareholders can be bold about investing as there is little risk with limited liability
• sole trader:

  • can start trading immediately, have 100% control
  • unlimited liability, 100% responsibility (no days off?)
• partnership:

  • liability spread between partners, complementary skills may enhance business
  • unlimited liability, including for debts caused by a partner, may be clashes between partners who seek overall control