Sole Proprietorship FAQ

Are sole proprietors personally liable for business debts?

Related Ads

Need Professional Help? Talk to a Lawyer

Enter Your Zip Code to Connect with a Lawyer Serving Your Area

searchbox small



Are sole proprietors personally liable for business debts?

Legally, a sole proprietorship is inseparable from its owner -- the business and the owner are one and the same. As a result, the owner of a sole proprietorship is personally liable for the entire amount of any business-related obligations, such as debts or court judgments. This means that if you form a sole proprietorship, creditors of the business can come after your personal assets -- your house or your car, for example -- to collect what the business owes them. For more information on personal liability, including examples, see Sole Proprietorship Basics.

For More Information

To learn more about sole proprietorships and other business forms, get Legal Guide for Starting & Running a Small Business, by Fred Steingold (Nolo), which provides all the legal and business information you need to get your business off the ground and running.

Form Your LLC Online

Form a Limited Liability Company

Form your own LLC, including:

  • Simple Interview Style Application
  • Company Name Validation
  • Automated Error Checking
  • Professional Articles of Organization
  • Unlimited Customer Service Support

Find a Business Lawyer

Related Ads