What is the personal liability of a member in a limited liability company?

What is the personal liability of a member in a limited liability company?

• A. Not limited
• B. Limited to the member's ownership percentage
• C. Limited to liabilities incurred by that member and excluding liabilities incurred by other members
• D. Limited to the amount invested by that member in the LLC

Answer: (D)

An LLC protects members from personal liability beyond what they put into the business. The general rule is that a member’s personal liability is limited to the amount of money or other property they invested in the LLC. This means personal assets aren’t at risk for the company’s debts or obligations, unlike a sole proprietorship or partnership where personal assets can be exposed. Exceptions exist, such as when a member personally guarantees a loan, commits fraud, or a court pierces the veil, which can lift the protection and expose personal assets. The other statements don’t fit because liability isn’t tied to ownership percentage, nor to liabilities incurred by other members, and it isn’t uncapped.

An LLC protects members from personal liability beyond what they put into the business. The general rule is that a member’s personal liability is limited to the amount of money or other property they invested in the LLC. This means personal assets aren’t at risk for the company’s debts or obligations, unlike a sole proprietorship or partnership where personal assets can be exposed. Exceptions exist, such as when a member personally guarantees a loan, commits fraud, or a court pierces the veil, which can lift the protection and expose personal assets. The other statements don’t fit because liability isn’t tied to ownership percentage, nor to liabilities incurred by other members, and it isn’t uncapped.