What Is Limited Liability?

What is limited liability?

Limited liability is when a company’s liability is limited to a fixed sum, which generally comes to the monetary value of the person’s investment in a company or other partnership. If a company with limited liability is sued by another party, the other party is not going after their personal assets, they are going after the company – not the company’s owners or investors. A shareholder or investor of a limited liability company will not personally be held responsible for the debts of the company, should the company fall under the scrutiny of a lawsuit. Limited liability protects the individual from having their assets evaluated if their company is sued by another party.