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The concepts of unlimited liability and limited liability and their importance
What is unlimited liability in business?
Unlimited liability refers to the legal responsibility of business owners where they are personally liable for all the debts and obligations of the business. It means that personal assets of the owners can be used to settle business debts, which poses a higher level of risk for the owner(s).
How does limited liability protect business owners?
Limited liability protects business owners by limiting their personal liability for the debts and obligations of the business. Their liability is limited to the amount they have invested in the business, protecting their personal assets from business-related risks.
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