In a Limited Liability Company, what separates the owners from the company's liabilities?

In a Limited Liability Company (LLC), the distinct feature that separates the owners from the company's liabilities is the legal entity status. This legal status means that the LLC is recognized as a separate legal entity from its owners (members) in the eyes of the law. Consequently, the members are not personally responsible for the debts and liabilities incurred by the company. If the LLC faces legal actions or financial obligations, the personal assets of the members are generally protected, limiting their risk to the amount they have invested in the company.

This concept of legal entity status is fundamental to understanding why LLCs are often favored by entrepreneurs. It encourages investment and entrepreneurship by providing a safety net for personal assets. Without this separation, individuals running a business could be held personally responsible for business debts, which can pose a significant financial risk.

The other answer options, while related to business operations and management, do not specifically address the protection provided by the legal structure of an LLC. Corporate governance focuses on the system of rules, practices, and processes by which a company is directed and controlled, while company policy refers to guidelines adopted by the company for internal operations. Financial restrictions might pertain to regulations around funding or spending but do not create a protective barrier for personal liability.