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What is a type of liability in which you only lose your initial investment in the company?
Wiki User
∙ 10y ago
limited liability
Wiki User
∙ 10y ago
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.
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What is limited liablility company?
It is a company where the investors will only lose a limited amount, normally what they put in, if the company goes broke. They are protected from having to pay out more than their initial investment. There is therefore a limit on their 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.
Define unlimited liability?
A type of investment in which a partner or investor can lose an unlimited amount of money. Opposite of limited liability.
Definition of limited liability?
Type of investment in which a partner or investor cannot lose more than the amount invested.
What kind of business organization should you participate if you can afford to lose only the amount of your initial investment?
Limited partnership
What are some of the risks of buying insurance stocks?
There are several risks involving buying insurance stocks. As example you can lose your initial investment or a part of your investment. Another risk is that you can get addicted to winning.
What should you check before buying land or property?
Any person who has decided to purchase real estate musthave the title examined by a professional according to the professional practice standards in their particular jurisdiction. That is the only way to protect your most expensive investment. If the title is not examined the buyer may not only lose their initial investment but can also find themselves inheriting substantial financial liability.
Compare a sole trader with a franchise?
Sole trader - where a business is set up by one person Advantages: Has their own say Makes their own decisions. Disadvantages: Unlimited liability - have to pay everything yourself if you lose money. Franchise - where you buy into an existing company e.g. Mcdonalds Advantages: You are part of a well-known company Limited liability - if you lose monet, you only lose what you put in. The company you have bought into will provide the money
'why would unimited liability be considered as one of the biggest drawbacks to sole proprietorship'?
Because if the company gets sued, the sole proprietor could not only lose the entire company, he or she could also lose savings, home, credit, and everything else. In a limited liability structure, the creditors can usually only obtain whatever assets the company owns, not the property of the shareholders or members who do not actually manage the company.
What are joint stocks companies?
A joint-stock company is a pooling of resources by investors who want to start a venture but do not have enough capital. they share the profits eventually BUT..... if the investment fails, the loss will be shared by everyone( you will lose your shirt and boxer briefs too!) as opposed to another venture with the same pooling of resources but under the umbrella of a limited liability company (where your boxer briefs will be protected )and the company loses but not the individuals. You get to keep your boxer briefs. :)
Why is it important to use safe investments?
Because, the purpose of an investment is to earn a profit using it. But, if an investment is not safe then there is a chance that you'll lose your investment. So you'll lose your hard earned money if your investment is not safe
Let Someone Else Decide Where To Invest Money?
Picking an investment company to put your money in is a very important decision. You are putting not only your money into an investment, but your faith in the investment as well. Consult with an investment broker before you make any decision on where to put money. They will show you the past investments of the company and the rise and fall of the stock amounts. Find a company with a good history and one that has a bright future so that you do not lose more money than you invest.
