Liability – Unlimited vs Limited – which is crucial for your startup’s survival?
When we first start a business we barely think about liability, whether that is unlimited liability or limited liability. I didn’t, and that’s why I wandered to financial wilderness for a decade after m,y business closed. I tell you the story later.
What is Unlimited Liability and Why is it Bad?
Unlimited liability is when you take responsibility for everything that can go wrong. It sounds noble. But what if the Russians invade your country and you cannot get your clients to pay you? Yet your financiers want you to pay them? You don’t yet know what challenges your business will face. Most of us don’t. Two out of every ten startups don’t last more than two years. What if you’re one of those?
Why is Limited Liability Crucial for a Startup
So, Unlimited Liability vs Limited Liability – which is crucial?