what is unlimited liability 
unlimited liability refers to the full legal responsibility that business owners and partners assume for all business debts this liability isn t capped and obligations can be paid through the seizure and sale of the owners personal assets without the protection that the popular limited liability business structure provides understanding unlimited liabilityunlimited liability typically exists in general partnerships and sole proprietorships it provides that each business owner is equally responsible for whatever debt accrued within a business if the company is unable to repay or defaults on its debt an owner s personal wealth can be seized to cover the balance owed most companies opt to form limited partnerships or limited liability companies instead where one or more business partners are only liable up to the amount of money they ve invested in the company 1an example of unlimited liabilityconsider four individuals who are working as partners each invests 35 000 into the new business that they own jointly the company accrues 225 000 in liabilities over one year all four partners are equally liable for repayment of the 225 000 if the company can t repay and or defaults on these debts the owners would be required to come up with 56 250 each to alleviate the 225 000 in debt in addition to their initial investment of 35 000 unlimited liability laws worldwideunlimited liability companies are typically found in jurisdictions where company law stems from english law unlimited liability companies are incorporated or formed through registration under the companies act of 2006 in the united kingdom 2other areas where these companies are formed under english law include australia new zealand ireland india and pakistan germany france the czech republic and two jurisdictions in canada are also areas where unlimited liability companies are commonly formed but they re referred to as unlimited liability corporations in canada despite the number of companies and countries in which they exist unlimited companies are an uncommon form of company incorporation due to the burden placed on owners to cover a company s debt specifically when the company faces liquidation one of the benefits of forming an unlimited liability subsidiary may be nondisclosure etsy an online crafts marketplace created an irish subsidiary in 2015 that s classified as an unlimited liability company public reports on money that the company moves through ireland or tax payment amounts are therefore no longer required 3joint stock vs unlimited liabilitya joint stock company jsc is similar to an unlimited liability company in the u s because shareholders have unlimited liability for company debts jscs operate under associations in new york and in texas under the texas joint stock company revocable living trust model as well as in other states 45this model has some basic differences from a general partnership including a lack of limited liability for shareholders formation through a private contract that creates a separate entity and the fact that one shareholder can t bind another shareholder regarding liability because each is equally responsible 