Which of the following is true about the liability in an LLC?

Which of the following is true about the liability in an LLC?

• A. Members are personally liable for all debts
• B. Members share personal liability equally
• C. No member is personally liable for its debts
• D. Members can have unlimited personal liability

Answer: (C)

In the context of an LLC, the key aspect of liability is the protection it offers to its members. Limited liability companies are designed to provide their members with a shield against personal liability for the debts and obligations of the business. This means that, in most circumstances, the members of an LLC are not personally liable for the company's liabilities beyond their investment in the company. Essentially, if the LLC incurs debt or faces legal issues, the members’ personal assets are generally protected, and creditors are limited to the assets of the LLC when seeking repayment or damages. This structure encourages entrepreneurship by reducing the risk associated with starting and operating a business, making it less daunting for individuals to invest in and manage a small business entity while knowing their personal assets are safeguarded against business liabilities.

In the context of an LLC, the key aspect of liability is the protection it offers to its members. Limited liability companies are designed to provide their members with a shield against personal liability for the debts and obligations of the business. This means that, in most circumstances, the members of an LLC are not personally liable for the company's liabilities beyond their investment in the company. Essentially, if the LLC incurs debt or faces legal issues, the members’ personal assets are generally protected, and creditors are limited to the assets of the LLC when seeking repayment or damages.

This structure encourages entrepreneurship by reducing the risk associated with starting and operating a business, making it less daunting for individuals to invest in and manage a small business entity while knowing their personal assets are safeguarded against business liabilities.