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Unlimited Liability - GCSE Business Definition

Reviewed by: Lisa Eades

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What is unlimited liability?

In GCSE Business, unlimited liability is defined as the legal responsibility of sole traders and business partners for all debts incurred by their business.

Sole traders and partners are not considered to be separate legal entities from the business they own. This means they are personally responsible for any and all of its debts. If their business runs into financial difficulties, they may need to use their own assets to pay these debts. This could mean a small business owner loses their savings or even their home if debts are significant.

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Lisa Eades

Reviewer: Lisa Eades

Expertise: Business Content Creator

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

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