Unlimited Liability

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Dictionary Says

Definition of 'Unlimited Liability'

A type of business where owners share joint and several responsibility for the entire amount of debt and other liabilities amassed by the business. Unlimited liability is not capped at a maximum amount and exists regardless of the amount of investment each owner has personally made. If the business is unable to meet any financial obligations or settle any outstanding liabilities, the owner's personal assets can be seized to satisfy the debts. This is in contrast to a limited liability structure where owners' losses cannot exceed the total amount invested in the business. Unlimited liability is found in general partnerships and sole proprietorships.
Investopedia Says

Investopedia explains 'Unlimited Liability'

Unlimited liability means that owners can be held personally accountable for a business's debt. For example, three partners each invest $20,000 in a business. The business accrues $150,000 in liabilities. If the business is unable to repay the debts or defaults on its debt, each of the three partners is equally liable for the debt. In other words, each would have to come up with $50,000 above their initial investment to satisfy the debt. Placing personal assets at risk can be disadvantageous and many businesses choose to form as limited partnerships instead.
Search results for

'Unlimited Liability'

  • Series 65 Study Guide - Analyzing Your Client's Financial Profile ...

    http://www.investopedia.com/exam-guide/series-65/analyzing-client-profile/client-type.asp
    ... one and the same. The sole proprietor has unlimited liability and is responsible
    for all business debts. For tax purposes, all business ...

  • Asset Protection For The Business Owner

    http://www.investopedia.com/articles/pf/08/asset-protection-business.asp
    ... knowledge and consent. This feature of unlimited liability contrasts with the
    limited liability of the owners of a corporation. Not only ...

  • Series 66 Study Guide - Analyzing Your Client's Financial Profile ...

    http://www.investopedia.com/exam-guide/series-66/analyzing-financial-profile/client-type.asp
    ... Limited partnership - Here the general partner is responsible for managing the business
    and has unlimited liability for its debts, while the limited partners ...

  • Oil: A Big Investment With Big Tax Breaks

    http://www.investopedia.com/articles/07/oil-tax-break.asp
    ... sell. This type of arrangement is similar to a general partnership in that
    each participant has unlimited liability. Working interests ...

  • Series 7 Study Guide - Equities - Equity Terminology ...

    http://www.investopedia.com/exam-guide/series-7/equities/equity-term.asp
    ... If, heaven forbid, someone is in the store at the time and is disfigured
    or killed, you as the owner have unlimited liability. You ...

  • Series 6 Study Guide - Evaluation of Customers - Suitability ...

    http://www.investopedia.com/exam-guide/finra-series-6/evaluation-customers/suitability-factors.asp
    ... Limited partnership - the general partner is responsible for managing the business
    and has unlimited liability for its debts, while the limited partners are ...

  • Series 7 Study Guide - Packaged Securities - Introduction ...

    http://www.investopedia.com/exam-guide/series-7/packaged-securities/default.asp
    ... Many of these programs are organized as limited partnerships, with the general partner
    bearing unlimited liability and the limited partners being liable only ...

  • Offset Risk With Options, Futures And Hedge Funds

    http://www.investopedia.com/articles/trading/09/offset-risk-options-futures-hedge-funds.asp
    ... negative. This does come with some risk, as selling naked calls is seen as
    a risky strategy due to its potentially unlimited liability. ...

  • How can a trust lower federal transfer tax liability?

    http://www.investopedia.com/ask/answers/08/trust-lower-tax-liability.asp
    ... How can a trust lower federal transfer tax liability? ... In an estate transfer to a
    surviving spouse, there are unlimited deductions, so taxes are not an issue. ...

  • Tax-Efficient Wealth Transfer

    http://www.investopedia.com/articles/retirement/07/reduce-estate-tax.asp
    ... various estate planning goals and objectives, but transferring large sums of money
    or other assets into these trusts at once can often result in gift liability ...

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