What type of business is defined in part by its unlimited liability?

A sole proprietorship is a type of business defined by its unlimited liability. In this structure, the owner is personally responsible for all debts and liabilities incurred by the business, meaning their personal assets can be at risk if the business fails. This contrasts with corporations and limited liability companies, where owners have limited liability protection. As a result, while sole proprietorships are easy to set up and manage, the financial risk is significantly higher for the owner.