What is the liability of members in a Limited Liability Company (LLC)?

What is the liability of members in a Limited Liability Company (LLC)?

• A. Members are personally liable for company debts
• B. Members are not personally liable for debts of the LLC
• C. Members have unlimited liability
• D. Members have limited liability only for intentional misconduct

Answer: (B)

In a Limited Liability Company (LLC), members benefit from personal liability protection, meaning they are not personally liable for the debts and obligations of the company. This structure is designed to safeguard members' personal assets from being used to satisfy business debts. The key feature of an LLC is that it combines the principles of partnership and corporation. It allows for flexibility in management and taxation while ensuring that individual members are shielded from personal liability related to the LLC's financial obligations and legal liabilities. This protection encourages entrepreneurship by reducing the financial risk associated with operating a business. Limited liability means that if the LLC encounters financial difficulties or is sued, only the assets of the LLC are at risk. Members’ personal assets—such as homes, cars, and personal bank accounts—are generally protected. This structure makes it an appealing choice for many small business owners. Options suggesting personal liability or unlimited liability misrepresent the fundamental protections that come with forming an LLC, thereby leading to confusion about the legal implications of membership in such a company.

In a Limited Liability Company (LLC), members benefit from personal liability protection, meaning they are not personally liable for the debts and obligations of the company. This structure is designed to safeguard members' personal assets from being used to satisfy business debts.

The key feature of an LLC is that it combines the principles of partnership and corporation. It allows for flexibility in management and taxation while ensuring that individual members are shielded from personal liability related to the LLC's financial obligations and legal liabilities. This protection encourages entrepreneurship by reducing the financial risk associated with operating a business.

Limited liability means that if the LLC encounters financial difficulties or is sued, only the assets of the LLC are at risk. Members’ personal assets—such as homes, cars, and personal bank accounts—are generally protected. This structure makes it an appealing choice for many small business owners.

Options suggesting personal liability or unlimited liability misrepresent the fundamental protections that come with forming an LLC, thereby leading to confusion about the legal implications of membership in such a company.