Most U.S. business activity takes place in limited-liability firms, where entrepreneurs shield their outside wealth if the firm fails. Standard macroeconomic models instead consolidate personal and business balance sheets, assuming an entrepreneur’s entire net worth backs firm debt. To study how limited liability changes the aggregate cost of uninsurable business risk, I develop a model in which a risk-averse entrepreneur divides wealth between equity in a firm with priced default risk and safe personal assets held outside it. The framework nests the standard net-worth model under full recourse, where lenders seize all personal wealth upon default. Unlike the standard model, where no entrepreneur holds safe wealth and firm debt simultaneously, limited liability lets entrepreneurs keep personal wealth safe while issuing risky debt, shifting failure losses to lenders. In a preliminary partial-equilibrium analysis, limited liability raises leverage, capital, and output above the net-worth benchmark, with gains that grow with failure risk and vanish as default risk approaches zero.