Business- Limited liability

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7 Terms

1
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Limited liability

Any depts incurred by the business belong to the business and the owners can only lose money up to the amount they invested. Their personal belongings are not liable.

2
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Unlimited liability

The owner is responsible for any debts of the business. Therefore there is potential for the owner to lose their personal belongings

3
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Liability

The legal responsibility of a business towards its debts

4
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Do sole traders have limited or unlimited liability

Unlimited liability

5
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Does a private limited company (ltd) have limited liability or unlimited liability

Limited liability

6
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Unlimited liability risk, control, profits, privacy

  • more risk

  • Owner has 100% control of decisions

  • Owner keeps 100% of profits

  • Accounts do not have to be made public

7
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Limited liability risk, control, profits, privacy

  • Reduces risk for the owner

  • The amount of control held by the main owner depends on the proportion of the business sold as shares to other shareholders

  • Profits are shared between shareholders in proportion to the number of shares they hold

  • Accounts are filed with companies house and can be viewed by anyone on payment of a small fee