Limited liability means:

**The reasoning** Limited liability is a legal protection for business owners. It means that if the company goes bankrupt or faces huge debts, you can only lose the money you originally invested — nothing more. Your personal property (house, car, savings) stays safe. Think of it like this: If you invest ₦500,000 in a limited liability company and it collapses owing ₦5 million, you lose your ₦500,000, but creditors cannot chase you for the remaining ₦4.5 million from your personal accounts. Your risk is "limited" to what you put in. **Why the wrong options tempt you** **A) "Owners pay all debts"** — This is *unlimited* liability (like sole proprietorship). The opposite of what we want! **C) "No taxes"** — Tempting because students confuse legal protections with tax exemptions. All businesses pay taxes. **D) "No profit"** — Makes no sense, but you might pick it under exam pressure if you're not clear on the concept. **Quick takeaway** Limited liability = You can only lose what you invested, not your personal wealth. It's the key advantage of forming a company!