2.1.3 Liability

    Cards (4)

    • Limited liability : business has a separate legal identity from owners so owners can only lose as much money that they've put into the business and are not responsible for the business' debts
      • Private Limited Company (LTD)
      • Public Limited Company (PLC)
    • Unlimited Liability : Owners are fully responsible for any business debts so personal assets can be seized and business and owner are seen as one in the eyes of the law
      • Sole Trader
      • Partnerships
    • Finance & limited liability:
      • easier for them to raise lots of finance via share capital
      • investors may be more willing to become part/share owners as they know they can only lose as much as they put in
    • Finance & unlimited liability:
      • cannot use share capital
      • unlimited liability may limit the number of people they can persuade to invest and amount of money they can get of investors
      • some sources of finance may be more willing as they know that they are likely to get their money back even if the owners have to sell personal assets
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