What is Unlimited Liability and Limited Liability?

Unlimited Liability 

Unlimited Liability status commonly exists with sole trader and general partnership business entities. With Limited Liability: 

• business owners are liable for any debts incurred by the business and legally obligated to repay the debt obligations of their business. 

• the owners' personal assets can be seized to settle the financial obligations of their business. 

• the liability of business owners is not capped. 

• if the business goes into liquidation, the owner has to repay all the debts themselves, even if they have to sell their assets and possessions. 

Limited Liability 

Limited Liability status exists in limited liability companies and partnerships. With limited liability: 

• business owners are not legally obligated to repay the debt obligations of their companies. 

• the owners' personal assets cannot be seized to settle the financial obligations of the business. 

• the owners aren't personally responsible for the debts of the business. 

• there is no limit to the amount of money for which you can be liable.