Which businesses have unlimited liability?




Which businesses have unlimited liability?
Before telling that which businesses have unlimited liability, I would like to define what unlimited liability is. Unlimited liability is the concept that if the business is unable to pay off its debt then the owner of the business will be forced to sell his or her personal assets in order to repay the loan.

Example:

Mr. A is a sole proprietor and he owns a business by the name of XYZ. The business shuts down after repeated losses. The business XYZ has to pay $10,000 to its creditors, but the business has no assets left to repay the loan. Mr. A, the owner of the business, has a car worth $10,000. Mr. is a sole trader so the creditors will ask his to sell his personal car to pay their money. This concept is called unlimited liability.

Unlimited liability
Sole trader
Partnership

Limited liability
Private limited company
Public limited company





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