Limited liability (Edexcel GCSE Business): Flashcards
📚Flashcards
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13 cards from this deck
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Practise the cards
13 cards from this deck
What is liability in business?
What is liability in business?
Legal obligation to pay company's debts
What is unlimited liability?
What is unlimited liability?
Owner personally responsible for all business debts
Which business type has unlimited liability?
Which business type has unlimited liability?
Sole traders
What's at risk with unlimited liability?
What's at risk with unlimited liability?
Personal assets: home, car, savings, possessions
What is limited liability?
What is limited liability?
Owners only risk their original investment amount
Which business type has limited liability?
Which business type has limited liability?
Private limited companies (Ltd)
What is a separate legal entity?
What is a separate legal entity?
Company exists independently from its owners
What's protected with limited liability?
What's protected with limited liability?
Personal assets: homes, savings, possessions
Maximum loss for Ltd company owners?
Maximum loss for Ltd company owners?
Only their original investment in shares
Who controls a sole trader business?
Who controls a sole trader business?
Owner has complete control (100% ownership)
Profit distribution in sole trader businesses?
Profit distribution in sole trader businesses?
Owner keeps all profits
Must Ltd companies make accounts public?
Must Ltd companies make accounts public?
Yes, must file with Companies House
Which liability type has higher personal risk?
Which liability type has higher personal risk?
Unlimited liability