What must business owners understand regarding a limited company?

Business owners of a limited company must understand that their liability is limited to the amount they have invested in the business. This means that if the company incurs debts or faces financial difficulties, the owners’ personal assets cannot be claimed by creditors to satisfy those debts; they are only at risk of losing their investment in the company. This feature is a cornerstone of limited liability companies and encourages investment and entrepreneurship, as it protects personal assets from potential business failures.

In contrast, the other options suggest scenarios that do not accurately reflect the structure and principles of a limited company. For instance, owners are not personally liable for the company’s debts, contrary to the first option. The third option about taking out loans does not apply, as limited companies can indeed borrow funds. Finally, the statement regarding ownership does not encompass the often shared nature of ownership in limited companies, particularly when multiple shareholders are involved.