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The general answer is "NO" since the whole reason that states enacted limited liability company statutes was to limit the liability of the owners of the LLC to the amount of their investment. However, a member of an LLC can be personally liable for debts of the LLC in certain specific cases. Some examples include:

* a member is liable if he guaranteed the debt * a member can be liable if the debt was obtained through fraud * a member can be liable for the LLC's failure to pay over payroll taxes to the IRS * a member can be liable if he took money out of the LLC at a time when it was insolvent

* a member can be liable under a "piercing the corporate veil" theory

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16y ago
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12y ago

No, unless a shareholder, officer or director has signed a debt in a personal capacity.

The purpose of a corporation is to shield corporate owners and officers and direntors from liability including debts of the corporate and actions for wrongful actions like auto accidents while driving a corporate car, or death of an employee of the corporation while acting as an employee. A lender or a person hurt by an accident may only sue the corporation for the liability in a "perfect world".

However, there are several ways to have an individual owner etc. become personally liable. First, if a corporation needs an operating loan it is not unusual for a lender to require an individual to sign as a gaurantor of the loan, or a co-debtor. If an individual acts in this individual capacity, he or she can be personally liable for the debt in which he or she acted as an individual.

Second, if a person has treated the corporation as his own personal account, and the assets of the corporation have not been kept separate for corporate use only, a court can order that the corporate veil be pierced. This effectively means that the corporation is treated like any other sole proprietorship and all individual protection is lost.

Third, (but probably not last) if a director or officer signs documents on behalf of the corporation but does not use his or her title, he may be liable on that document - personally. As an example, if the corporate president John Smith, signs a corporate check paying for a shipment of lumber, and does not sign it "john smith, President" he may have personal liablilty to cover that check.

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7y ago

A limited liability company (LLC) is the United States-specific form of a private limited company. It is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

As in a corporation the debts are limited to the company (a fictitious business entity) and cannot be passed on to the ultimate individual owners (usually real individual persons).

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Q: Who is responsible for the debts in a limited liability company?
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Related questions

The limited liability provided to limited partners means that they are not responsible for the debts of the business beyond?

the amount they have invested in the company.


What is limited liability?

shareholders are not responsible for the debts of the corporation.


What term means stockholders are not responsible for debts of the corporation?

limited liability


Does a co-operative have limited liability?

Limited liability means that owners of a corporation or members of a cooperative are not personally responsible for the debts the company incurs. It also means that if the company should do something that's against the law, the owners or members can't be held personally responsible.


What is a type of liability in which you only lose your initial investment in the company?

A type of liability in which you only lose your initial investment in the company is limited liability. This means that shareholders or owners are only responsible for the debts and obligations of the company up to the amount they initially invested, and their personal assets are not at risk. This is commonly seen in the form of limited liability companies (LLCs) and corporations.


Which is an advantage of a limited partnership?

Liability Protection:In general partnerships, each participant is personally responsible for the actions of the company. This includes debts, liabilities and the wrongful acts of other partners. One advantage of a limited liability partnership is the liability protection it affords.Flexibility:Liability partnerships offer participants flexibility in business ownership.


What does the word Limited stand for in Private Limited Company and Public Limited Company?

The word "limited" stands for "limited liability". This means that the liability of a shareholder in a company for the company's debts (for example, in an insolvency or liquidation scenario) is "limited" to any unpaid capital on their shares. In most cases, there will be no amount unpaid (ie. a fully paid share) and so no liability of a shareholder for the company's debts.


What is the meaning of limited liability?

Limited liability is a type of liability that cannot exceed the amount that has been invested in a partnership or limited liability company. Limited liability protects personal assets from the risk of being seized to satisfy creditor's claims, debts and other obligations. For privately or publicly held corporations, a shareholder's responsibility for the company's debts is limited to the par value of paid up shares. The company itself as a legal entity is liable for the rest.


Which type of investment holds the investor responsible for debts and obligations of the company?

unlimited liability


What is limited Liability insurance?

Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. A shareholder in a limited liability company is not personally liable for any of the debts of the company, other than for the value of his investment in that company. The same is true for the members of a limited liability partnership and the limited partners in a limited partnership. By contrast, sole proprietors and partners in general partnerships are each liable for all the debts of the business (unlimited liability).


What is a limited company?

A limited company is a corporation, In legal terms the company or corporation is a separate person from its investors. If it goes bankrupt, its investors lose their investment but cannot be pursued for the corporation's unpaid debts. Their liability is limited to their investment--hence, "limited" company.


What is true for a limited partnership?

Limited liability is a type of liability that cannot exceed the amount that has been invested in a partnership or limited liability company. Limited liability protects personal assets from the risk of being seized to satisfy creditor's claims, debts and other obligations. For privately or publicly held corporations, a shareholder's responsibility for the company's debts is limited to the par value of paid up shares. The company itself as a legal entity is liable for the rest.