Utah General Sales License Practice Exam 2025 – Complete Study Guide

A sole proprietorship is a business structure where one individual owns and operates the business. One of the key characteristics of this structure is that the owner is personally liable for all debts and obligations of the business. This means that if the business incurs debts or faces legal issues, the owner's personal assets can be at risk to satisfy those obligations.

In contrast, limited liability is a characteristic of corporations and limited liability companies (LLCs), where the owners are not personally responsible for the debts of the business. The ability to sell the business to multiple investors is typically associated with structures such as corporations, which can issue shares of stock. Furthermore, tax filing as a corporation involves different requirements and is not applicable to a sole proprietorship, which usually reports business income on the owner's personal tax return. Therefore, the statement that the owner is personally liable for the business's debts accurately reflects a fundamental feature of sole proprietorships.