limited liability

noun

|Updated on: 23 Jun 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

On behalf of a limited liability company called Longmore, Greenberg lobbied to convert two old buildings on the defunct Anchor Marine property on the river's south bank into a 230-seat restaurant and bar.

— david smiley and glenn garvin, miamiherald, "Mystery Miamian tied to Trump probe had many names, foul mouth, 2 DUI busts," 19 June 2018
Prado Management LLC, a Delaware limited liability company, sold the home.

— lorraine longhi, azcentral, "Luxury homes: $4.7M Scottsdale mansion has secret room, 2 towers and tennis court," 18 June 2018
Behind the scenes, AT&T began paying $50,000 a month to an obscure limited liability company founded by Trump’s personal lawyer, Michael Cohen.

— felix gillette, Bloomberg.com, "Get Ready for Big Media to Get Bigger After AT&T Victory," 13 June 2018
The new filings reflect a change in the structure of Ivanka Trump's payments from limited liability companies affiliated with the Trump Organization.

— chicagotribune.com, "Jared Kushner, Ivanka Trump made at least $82 million in outside income last year while serving in the White House, filings show," 12 June 2018
The new filings reflect a change in the structure of Ivanka Trump's payments from limited liability companies affiliated with the Trump Organization.

— Anchorage Daily News, "Jared Kushner, Ivanka Trump made at least $82 million in outside income last year while serving in the White House," 12 June 2018
One of the biggest innovations coming from Silicon Valley: Laurene Powell Jobs and Zuckerberg and Chan have each set up limited liability companies to carry out some of their charitable endeavors.

— kathleen pender, San Francisco Chronicle, "Charitable giving topped $400 billion for first time in 2017," 12 June 2018
The new filings reflect a change in the structure of Trump's payments from limited liability companies affiliated with the Trump Organization.

— anu narayanswamy, latimes.com, "Jared Kushner and Ivanka Trump made at least $82 million in outside income last year while serving in the White House, filings show," 12 June 2018
The new filings reflect a change in the structure of Ivanka Trump's payments from limited liability companies affiliated with the Trump Organization.

— the washington post, OregonLive.com, "Ivanka Trump, Jared Kushner made $82M in outside income in 2017, filing shows," 11 June 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