A sole proprietor is primarily responsible for what type of business liability?

A sole proprietor is primarily responsible for personal liability because, in a sole proprietorship, there is no legal distinction between the owner and the business entity. This means that the owner is personally accountable for all business debts and obligations. If the business incurs debt, faces lawsuits, or encounters any legal issues, the owner's personal assets—such as their home, car, and savings—can be at risk.

This contrasts with limited liability, which typically applies to corporations and limited liability companies (LLCs), where owners and shareholders can only lose what they invested in the business. Shared liability refers to partnerships where liability is distributed among partners. Corporate liability applies to incorporated entities, which also provide a shield against personal liability for their owners. Thus, the nature of personal liability in a sole proprietorship highlights the significant risk that individual owners bear in their business operations.