What is Limited Liability?

The best way to explain limited liability is this - you risk what you put in. In other words, limited liability is a way to make sure that a person who is engaging in business does not risk his or her personal possessions in case the business fails. Any investor, partner, or member of the company that by law has limited liability cannot be made responsible for any unfulfilled company obligations and debts that are more than the amount that the person has invested.

Jack and Jill

Here is a simple comparison. Jack and Jill are friends. Jack is a handy guy and Jill is a great cook. To earn money from their talents, both start their own business. Jack earns his living by doing renovations. He bought his own equipment and simply advertises his services under his own name. Jack is a sole proprietor.

Jill decided to open a bakeshop. Before going into business, however, Jill has formed a small corporation (an S-Corporation), called Jill's Cakes, Inc. Jill invested her savings into Jill's Cakes, Inc. as a starting capital and then bought her baking equipment and leased her shop on behalf of her corporation. So long as things go well for Jack and Jill there are almost no differences between the two ways of doing business.

As soon as things turn sour though, the differences become apparent. One day, Jack mopped the floor right before leaving the apartment he just painted, but forgot to put up a sign. The owner walked in, slid on the wet floor and broke an ankle. He is suing Jack for medical expenses and lost wages. Jill accidentally dropped a peanut in a wrong batch of batter and caused a severe allergy attack in one of her customer. That customer is suing her for medical bills and pain and suffering.

What is at risk for Jack and Jill? Jack is risking everything he owns - his work equipment, his truck, his house, his personal belongings. So long as there is a judgment against him, Jack must sell anything he owns to pay it. Jill is risking only her business assets - her cooking equipment, her cash reserves, and anything else owned by Jill's Cakes, Inc. But her personal things, such as her car and her apartment, are safe. Her business may become bankrupt, but her life will not be (completely) destroyed.

Of course, this story describes a worst case scenario. Many businesses prosper without many troubles. But many also fail, and it is so easy for a business owner to take advantage of limited liability that everyone should do it.

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What is Limited Liability and why it is important?

An accomplished executive with over 22 years of experience driving business growth and international market development. As a highly successful CEO and Managing Director, I have consistently delivered exceptional results for leading companies. My proven expertise includes spearheading business expansion across Ukrainian, European, and North American markets, achieving over 200% growth in sales within competitive environments.

Recognized as a motivational and influential leader, I excel in guiding teams to achieve ambitious goals and meet challenging sales targets. I am skilled at building and maintaining lasting relationships, using my proficiency in Ukrainian, English, and Russian to communicate with clarity and diplomacy.

As the owner of an exclusive franchise for company registration and business services in the United States, I was responsible for developing and successfully implementing comprehensive strategies to drive global business growth. These strategies enabled me to reclaim market share from competitors and attract a substantial number of new clients from around the world. To achieve these goals, I effectively leveraged the resources and expertise of four companies located in the USA, the UK, Estonia, and Ukraine.

I conducted in-depth research into the services, business models, and strategies employed by competitors, identifying opportunities to enhance my offerings. By presenting prospective clients with tailored solutions that combined the best practices and most competitive advantages in the industry, I established a strong value proposition that set my services apart in the marketplace.

At TOPUS, our team's strategic approach in business management has led to an impressive 500% revenue increase and a 30% cut in expenses. Our commitment to fostering an open, transparent, and accountable company culture has been instrumental in achieving these results. The strategies we've developed and implemented have not only increased growth by 200% in the year 2022 but have also guided the transformation of underperforming departments. 

With an unwavering focus on new business development, my leadership at TOPUS has resulted in significant international market expansion and the establishment of enduring customer relationships. Through executive leadership and employee training, we've established both short-term and long-term financial and expansion goals, steering the company towards a steadfast presence in diverse markets. These experiences underscore my dedication to driving strategic initiatives and organizational excellence in competitive landscapes.

What is Limited Liability and why it is important?

Lex Parkhomenko