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What is Limited Liability
If someone asks me why should I choose a private limited or OPC instead of partnership or proprietorship I use to explain the major advantage of a Limited Company, which distinguishes it from a firm, that is Limited Liability. But what does that mean? That's what we are going to see in this Article.
What is Called a Company?
A company is a Legal Entity which is registered under Indian Companies Act, 2013. The various forms of Companies are Private Limited Company, One Person Company, Public Limited Company, Non Profitable Company, and many more. This is completely different from a Firm. One thing that majorly differentiates a company from firm is Limited Liability
What is Limited Liability?
Limited Liability is a legal structure where in a shareholder’s responsibility is limited on loss or liability. In simple words Limited liability is the extent to which a company shareholder or director is financially responsible for their company’s debts.
Once it has been incorporated, the business becomes a separate legal entity from its owners. That means the finances and assets of the individual and the finances and assets of the company are completely separate. If the company is sued or cannot pay its debts, the owners are only liable for the debt to the value of the money they have already invested in the business.
