BizTerm Definition
limited liability
Full Definition

The maximum amount a business owner can lose if the business is subject to debts, claims or other liabilities. An owner of a limited liability company or a person who invests in a corporation (a shareholder) generally stands to lose only the amount of money invested in the business. This means that if the LLC or corporation folds, creditors cannot seize or sell an owner's home, car or other personal assets. (This is known as "limited personal liability.") By contrast, owners of a sole proprietorship or general partnership have unlimited liability for business debts, as do the general partners in a limited partnership and limited partners who take part in managing the business.

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