Question

What is "limited liability" and why does it make the corporation a popular organizational structure?

What is "limited liability" and why does it make the corporation a popular organizational structure?

Homework Answers

Answer #1

Limited liablity is a legal status where a person's financial liablity is limited to a fixed sum.If a company with limited liablity is sued,then the claimants are suing the company,noy its owners or investors.A shareholder in a limited liablity company is not personally liable for any of the debts of the company,other than for the amount already invested in the company and for any unpaid amount on the shares in the company,if any.By contrast,sole proprietors and partners in general partnership are each liable for all the debts of the business(i.e unlimited liablity).

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