What is the concept of limited liabilities?

Limited liability is a legal structure that protects an individual's personal assets from being used to satisfy the debts or liabilities of a business. This means that if a company faces financial difficulties or legal claims, the owners or shareholders are only responsible for the amount they invested in the business, and their personal assets, like homes or savings, are shielded from creditors. This concept encourages investment and entrepreneurship by reducing the financial risk for individuals. Limited liability is commonly associated with corporations and limited liability companies (LLCs).