Jasmin,Shou-Yi,and Vanessa form an LLC,and each contributes $25,000 in capital.The LLC operates for a period of time,during which it borrows money from banks and purchases goods on credit from suppliers.After some time,the LLC experiences financial difficulties and goes out of business.If the LLC fails with $500,000 in debts,which of the following is an accurate statement regarding the liability of Jasmin,Shou-Yi,and Vanessa?

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When an LLC goes out of business with unpaid debts, the liability of each member is limited to their capital contribution. This means that Jasmin, Shou-Yi, and Vanessa will lose their capital contribution of $25,000 each, but will not be personally liable for the rest of the unpaid debts of the LLC. This is the main advantage of forming an LLC, as it protects the personal assets of the members from the business liabilities.

Jasmin,Shou-Yi,and Vanessa Form an LLC,and Each Contributes $25,000 in Capital