unlimited liability
Full personal exposure
Unlimited liability is a legal obligation in which business owners are personally responsible for all company debts.
If the business cannot pay its creditors, owners may lose personal assets—homes, savings, vehicles—to satisfy those debts.
Sole proprietorships and general partnerships typically carry unlimited liability, while corporations and LLCs offer protection from it: He chose to incorporate rather than face unlimited liability as a sole proprietor.
- general partnershipJointly owned, jointly liable business
- insurance policyAgreement guaranteeing financial protection
- tort lawRules for civil wrongs
- sole proprietorshipUnincorporated individual-owned business
- business ownerSomeone running their enterprise
skin in the game · personal assets · on the hook · bankruptcy law · deep pockets · risk assessment · fiduciary duty · contract law · financial insolvency · indemnity · creditworthiness · cooperative · joint venture · legal compliance · nonprofit organization · debt restructuring · going concern · franchise
unlimited liabilitylimited liability
Capped financial responsibility for owners
limited liability company · LLC · limited partnership · corporation · incorporated
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