In terms of personal liability of the owner, a sole proprietorship:

• A. limits the owner's liability to the amount invested in the business
• B. requires liability to be shared equally among all employees
• C. exposes the owner to unlimited personal liability for business debts
• D. protects the owner from all personal liability

Answer: (C)

Verified step by step guidance

1. Understand the concept of a sole proprietorship: A sole proprietorship is a business structure where the business is owned and operated by a single individual. It is the simplest form of business organization.
2. Clarify the legal implications of a sole proprietorship: In this structure, there is no legal distinction between the owner and the business. This means the owner is personally responsible for all debts and obligations of the business.
3. Analyze the options provided in the problem: Evaluate each statement to determine its accuracy based on the characteristics of a sole proprietorship.
4. Focus on the correct answer: The correct answer is that a sole proprietorship exposes the owner to unlimited personal liability for business debts. This means the owner's personal assets can be used to settle business debts if the business cannot pay them.
5. Conclude with the importance of understanding liability: Highlight that understanding personal liability is crucial for anyone considering starting a sole proprietorship, as it directly impacts their financial risk.