Which statement about liability in business forms is true?

• A. A sole proprietorship provides limited liability protection.
• B. An LLC offers no liability protection.
• C. A sole proprietorship places personal liability on the owner.
• D. An LLC requires no formal filings.

Answer: (C)

In a sole proprietorship there is no legal separation between the owner and the business. If the business owes money or faces a lawsuit, the owner’s personal assets—like savings, home, or car—can be used to satisfy those obligations. That’s why this form places personal liability on the owner. The other statements don’t fit because a sole proprietorship does not offer limited liability, an LLC typically provides liability protection to its members, and forming an LLC requires formal filings such as articles of organization and an operating agreement.