The owner of a sole proprietorship is personally liable for the debts of the business, whereas the shareholders of a corporation are not personally liable for the debts of the business.

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Quizplus · Accepted Answer

This is one of the main differences between a sole proprietorship and a corporation. In a sole proprietorship, the business owner and the business are considered one and the same, so the owner is personally liable for any debts or legal issues that arise. In a corporation, however, the business is considered a separate legal entity from the shareholders, so the shareholders are not personally liable for any debts or legal issues of the business. This is known as limited liability.

The Owner of a Sole Proprietorship Is Personally Liable for the Debts