Limited liability Flashcards
1
Q
What is liability?
A
The legal responsibility of a business towards its debts.
2
Q
What is unlimited liability?
A
The owner of the business is legally responsible debts of the business.
3
Q
What are sole traders?
A
Businesses owned by one person.
(They have unlimited liability)
4
Q
What are potential threats to having unlimited liability?
A
Potential loss of belongings to pay off debts
5
Q
What is limited liability?
A
The owners and business are separate legal entities.
