Today’s episode is about “Limited Liability”. If you have ever taken a business class or read about starting your own business, you have heard or read this term. In this episode we translate what that actually means for you!
Limited Liability Defined
Limited Liability is legally defined as: “liability of a company’s owners for nothing more than the capital they have invested in the business.”
Limited Liability is discussed so much in the startup world because it is one of the most important factors you should consider when choosing an entity for your company. A business entity that offers limited liability, limits the liability of business owners to their investment in the company. That means, if you start a business that offers limited liability, creditors cannot go after the personal assets of the owner (e.g. a savings account, car, or house) to collect on any money owed by the business. This is true of loans, accounts of the business, and lawsuits. If the owners’ liability is limited by the entity selected at the beginning, creditors can only collect money or assets inside the business.
In today’s episode, we talk about:
- Protecting your personal assets from your business debts
- Protecting your house from your children’s business endeavors
- A few causes of lawsuits in your business
If you have ever wondered what a legal hypothetical looks like, you should listen to find out how you might get sued in your business. Sometimes it is more bizarre than you might think!
Also, I give some suggestions on how to protect your business even if the thought of calling a lawyer is more than you can handle.
We have discussed this topic in more detail in other places. If you want to know more about limited liability, check out these articles: