A small business owner who is responsible for all debts and decisions has what type of liability?

• A. Limited liability
• B. Shared liability
• C. Unlimited liability
• D. Corporate liability

Answer: (C)

Unlimited liability means there’s no legal separation between the business and the owner. When the owner is responsible for all debts, creditors can go after personal assets to satisfy business obligations. This is typical of a sole proprietorship (or a general partnership), where the owner bears full financial risk. Limited liability would protect personal assets beyond the investment, corporate liability means the corporation is a separate entity with its own obligations, and shared liability implies multiple owners share the risk—none of which describe a single owner who bears all debts.