In the case of a sole proprietorship, what is the nature of personal liability for the owner?

In the case of a sole proprietorship, the owner has unlimited personal liability. This means that the owner is personally responsible for all the debts and obligations of the business. If the business incurs any debts or faces legal issues, creditors can pursue the owner's personal assets, such as their home, savings, or any other property, to satisfy those debts. This characteristic of sole proprietorships is vital for business owners to understand, as it directly impacts their financial risk and personal security. The unlimited liability contrasts with structures like corporations or limited liability companies, where the owners' personal assets are typically protected from business liabilities.