What does a sole proprietorship typically not protect the owner from?

The correct answer is that a sole proprietorship typically does not protect the owner from personal liabilities. In a sole proprietorship, the business and the owner are considered the same legal entity. This means that the owner is personally liable for all debts and obligations incurred by the business. If the business faces financial difficulties, the owner's personal assets, such as their home or savings, can be at risk to satisfy business debts.

In contrast, other options reflect aspects where a sole proprietorship may not provide personal protection. For instance, while the owner is responsible for business debts, these debts can encompass various expenses and obligations incurred during business operations. Tax liabilities are also handled at a personal level since income generated by the sole proprietorship is reported on the owner's personal tax return. Regarding investments, sole proprietorships require that any investments made are part of the owner's personal portfolio unless specifically defined in another business structure that offers more protections.

This inherent lack of distinction between the business and the owner underscores the vulnerability of the sole proprietorship structure when it comes to personal liability.