What is meant by "limited liability" in business structures under Texas law?

Limited liability refers to a legal structure where the owners of a business, such as shareholders in a corporation or members of a limited liability company (LLC), are not personally responsible for the debts and liabilities of that business. This means that if the business incurs debt or faces lawsuits, the personal assets of the owners—such as their homes or personal savings—are generally protected from being used to satisfy business obligations.

This characteristic is particularly significant in encouraging investment and entrepreneurship because it provides a safety net for individuals engaging in business activities. It allows them to take risks and pursue ventures without the fear of losing their personal wealth due to business failures.

In contrast, business structures offering no limited liability would expose owners to personal liability for business debts, leading to higher personal risk. Limited liability is thus a fundamental aspect that makes certain business structures (like corporations and LLCs) attractive to entrepreneurs and investors.