Business Liability

Unlimited Liability is where owners are liable for business debts, aka can have their personal assets seized to clear the debt. Sole traders & Partnerships.

Limited Liability is where owners can only lose what they have invested in the business, due to the process of incorporation. PLC & LTD.

Effects of liability on sources of finance

Sole traders and partnerships likely to rely on following sources:

-Owners capital

-Bank finance (loans and overdraft)

-Leasing

-Trade credit

Private and public limited companies can use:

-Share capital

-Bank finance (loans and overdraft)

-Angel or venture capital investment

-Peer to peer or crowdfunding

-Leasing

-Trade credit