Final answer:
The statement is false; while an LLC provides limited liability, members might still be held responsible for their own wrongful acts. Unlike a sole proprietorship where the owner shoulders all liabilities, an LLC treats the business as a separate legal entity. In a partnership, partners share liability and the partnership changes with the departure and addition of partners.
Step-by-step explanation:
The statement that a limited liability company (LLC) cannot be held liable for a loss caused by the wrongful acts of its members is false. An LLC does provide limited liability to its members, which means that the personal assets of the members are often protected from the company's debts and liabilities. However, this does not mean complete immunity from liability. Members might still be held liable for their own wrongful acts. A sole proprietorship requires the owner to shoulder all liabilities, which contrasts with the LLC structure where the business is treated as a separate legal entity. The statement in the question is a common misunderstanding about the liability protections provided by different business structures.
In contrast to an LLC, a sole proprietorship or partnership exposes owners to unlimited personal liability for the debts and obligations of the business. As such, a sole proprietor or partner might lose personal assets if the business incurs debts or is sued. Incorporation, however, afforded entrepreneurs the ability to protect their personal assets, limiting their liability to their investment in the business and attracting investors through this legal structure.
Business structures such as partnerships may have certain disadvantages as well, including shared liability among partners and potential changes that occur when partners leave or new ones join.