2.1.3 liability

Question 1

unlimited liability

Answer 1

if the business has debts the owner must pay even if this means selling their own possessions to find the money

Question 1

limited liability

Answer 1

a business owner is only liable for their original investments should the business fall into debt

Question 2

implications of limited liability

Answer 2

owner and business have operate legal identities.
owner and business have separate assets.
business can sell parts of the business to shareholders.
protection of the owners personal savings

Question 3

implications of unlimited liability

Answer 3

sole traders or partners may have to sell their own assets to pay debts of the business.
unable to sell shares in the business.