liability

Liability

The responsibility for business debts to be paid off

• unlimited

• Limited

Limited liability

Owners are not personally responsible for the debts of the business

Separate legal identity

Only lose what they invest

Unlimited liability

Business and owner are seen as one under the law

• sole traders and partnerships

Means the business debts are also personal and business opener can be forced to sell personal assets such as house to pay off business debts

Access to finance with limited liability

Usually find it easier to encourage people to invest into thier business - people are more willing to become part opener if they know they are only going to lose what they invest

Can raise lots of fiancé via share Capital

Access to finance as unlimited liability

Sole traders and partnerships may have to rely on internal and external which aren’t share capital sources as they cant rely on part owners

Loans, friends and family’s