limited liability

noun

|Updated on: 4 Aug 2018

Definition of limited liability

: liability (as of a stockholder or shipowner) limited by statute or treaty

Recent Examples of limited liability from the Web

The approximately 75 firms, most of them limited liability companies, were behind more than one out of every 10 eviction cases filed last year in the county, a Milwaukee Journal Sentinel analysis found.

— kevin crowe, Milwaukee Journal Sentinel, "'He'll evict you in a minute.' Landlord quietly becomes a force in Milwaukee rental business...and eviction court," 13 July 2018
Those are partnerships, sole proprietorships, limited liability companies and S corporations, and their owners pay their business taxes through their individual tax returns.

— richard rubin, WSJ, "U.S. Government Revenues Drop in Wake of Tax Cuts," 12 July 2018
The seller is a limited liability company called SMIR 3001 LLC, based in Miami.

— david lyons, Sun-Sentinel.com, "20-story office tower could be built across from Gulfstream Park in Hallandale," 12 July 2018
Operating agreements are a normal part of setting up a limited liability company, which also can help protect the parents’ assets from lawsuits and other problems created by the business.

— liz weston, The Seattle Times, "Can you afford to help your kid start a business?," 9 July 2018
In May, Campbell signed a quit claim deed and transferred ownership of the home to a limited liability company registered to an address of a commercial building that until last year was owned by her ex-husband.

— sarah blaskey and david smiley, miamiherald, "Where does she live? A Miami lawmaker's bizarre attempt to reside in her district," 3 July 2018
The plaintiffs in the lawsuit against Paradigm include six limited liability companies that hold property, managed by Eric Uhlenhoff, in the Treasure Valley.

— ruth brown, idahostatesman, "Facing lawsuit that it embezzled at least $1M, property management company files bankruptcy," 29 June 2018
Records show that through a land trust, Nagy and his wife bought the mansion from Brennan’s Bluff 7 limited liability company.

— bob goldsborough, chicagotribune.com, "Chicago Bears head coach Matt Nagy pays $2.75 million for newly built Lake Bluff mansion," 28 June 2018
According to her campaign, Ms. James raised approximately $416,000 from individual donors and more than $555,000 from political action committees, unions and limited liability corporations.

— jeffery c. mays, New York Times, "Letitia James, With Cuomo’s Help, Raises $1 Million in Attorney General Race," 12 July 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'limited liability.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of limited liability

1848

in the meaning defined above

See Words from the same year

NEW! Time Traveler

Financial Definition of LIMITED LIABILITY

limited liability

noun

What It Is

Limited liability is limited exposure to financial risk by investors of a company or a partnership. This exposure is usually limited to the individual's investment.

How It Works

In certain cases where an investor invests his money with a company or partnership, this investor will not be liable for any financial risk beyond what he has invested in the business entity. These types of entities are normally limited liability partnership arrangements and limited liability companies.

For example, if an investor enters into an agreement to join a LLC, his investment of $100,000 is his total liability. In other words, he can potentially lose all of this and no more. He won't be liable for any liability beyond this initial $100,000. If he were to invest additional sums, this limited liability would then match his total contribution.

Sole proprietorships and general partners in general partnerships, on the other hand, have unlimited liability.

Why It Matters

This concept of limited liability enters into the decision making equation of businesses and investors when forming a business entity, otherwise known as choice of entity. Depending on the risks and investments of all the participants, the decision may be made to organize a business with limited liability due to many factors, including but not limited to, taxes, dividends, risk, duration, profession and control.

Source: Investing Answers