What is a limited liability company?
A limited liability company (LLC) is a corporate structure in the United States whereby the owners are not personally liable for the company’s debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship .
What is unlimited liability in business law?
Unlimited liability is the legal obligation of company founders and business owners to repay, in full, the debt and other financial obligations of their companies. The legal obligation generally exists in businesses that are sole proprietorships or general partnerships.
What is a hybrid limited liability company?
The structure can be best described as a hybrid between limited and unlimited liability. Let us assume that three equal partners manage a business in which they invested $20,000 each. The business also owes $120,000 that it is unable to settle.
Why are sole proprietorships subject to unlimited liability?
The reason business owners of sole proprietorships and partnerships are subject to unlimited liability is because both business structures do not create a separate legal entity. The owners and the business are one entity.
What are the legal liabilities of a partner in a partnership?
In general, however, your personal assets as a partner will be protected from legal action. Basically, the liability is limited in the sense that you will lose assets in the partnership, but not those outside of it (your personal assets).
What are the different types of limited liability structures?
Several limited liability structures exist, such as limited liability partnerships (LLPs), limited liability companies (LLCs), and corporations.
What happens to my personal assets in a limited liability partnership?
Limited liability prevents that from occurring, and so the most that can be lost is the amount invested, with any personal assets held as off-limits. The actual details of a limited liability partnership depend on where it is created. In general, however, your personal assets as a partner will be protected from legal action.