what is the link between ownership and liability?
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- Thread Starter
- 29-10-2016 16:43
Offline22ReputationRep:Very Important PosterStudy Helper
- Very Important Poster
- Study Helper
- 30-10-2016 14:08
If someone is a Sole Trader, they have unlimited liability for the business - this means that any debt that is accrued by the business, the owner is also fully liable. There is no extinction between the business debt and the owner's debt.
If someone is the owner of a Ltd company, they have limited liability for the business - this is that they are only liable for the business' debt, for up to what they put into the business. Here, there is a distinction between the business debt and the owner.