What does limited liability protect the owners of a business from?

Limited liability primarily protects the owners of a business from personal debts incurred by the business. This means that if the business incurs debt or faces legal action, the personal assets of the owners are safeguarded. They are only liable for the amount they have invested in the company and cannot be pursued for the business’s debts beyond that investment. This protection encourages individuals to invest in businesses without the fear of losing personal assets, enabling entrepreneurship and economic growth.

While there are other financial aspects involved in running a business, such as overall financial liabilities or risky business decisions, these do not fall under the protections offered by limited liability. Additionally, the loss of company shares pertains more to the value of investments rather than personal financial responsibility, which is why it is not accurate in describing what limited liability protects against.