liability
Definition
Liability means legal responsibility for something that went wrong, which usually translates into owing money to someone who was harmed. If a customer slips and falls in your store, or if your product causes damage, you could be held liable and forced to pay for medical bills, repairs, or other losses.
Example
A plumber who installs a pipe incorrectly and causes a flood in a customer's home has liability for the water damage and the cost to fix it.
Watch Out
Your personal assets like your home and savings can be at risk if your business structure does not protect you from liability, which is why many owners form an LLC.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.