A sole proprietor has
Blank
______ personal liability for all business debts and obligations.

Question

A sole proprietor has 
Blank
______ personal liability for all business debts and obligations.

BlackTom AI · Accepted Answer

Let's break down the premise of the question and evaluate each possible completion.
Option 1: unlimited. This option fits the classic legal concept: a sole proprietor bears unlimited personal liability for all business debts and obligations. This means the owner's personal assets can be pursued to satisfy business debts, not just the business assets. This understanding aligns with general U.S. business-law principles for sole proprietorships where there is no legal separation between the owner and the business.
Option 2: no. This option would imply that the owner has no personal liability, which contradicts the fundamental structure of a sole proprietorship. In such a structure, the owner is personally responsible for debts; saying there is no liability would be inaccurate and misleading.
Option 3: little. This suggests only a small amount of personal risk, which does not reflect the standard rule for sole proprietorships. The liability is not limited to a portion or “little” risk; it is unlimited in scope, potentially affecting personal assets.
Option 4: limited. This implies some form of liability protection or separation between personal and business assets, as seen in corporations or limited liability companies. However, a sole proprietor does not enjoy this shield since there is no legal distinction between owner and business.
In summary, among the choices, only unlimited correctly describes the personal liability status of a sole proprietor, while the other options misstate how liability operates in this business form.

A sole proprietor has Blank ______ personal liability for all business debts and obligations.

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