Which business entity is characterized by its owners facing unlimited personal liability for debts?

The sole proprietorship is indeed characterized by its owners facing unlimited personal liability for debts. In a sole proprietorship, an individual operates a business as an extension of themselves, meaning there is no legal distinction between the owner and the business entity. This lack of separation means that any debts or liabilities incurred by the business directly affect the owner's personal assets. If the business fails or faces legal actions, creditors can pursue not just the business's assets but also the personal savings, properties, and other assets of the owner. This is a significant risk associated with this type of business structure, making it crucial for sole proprietors to be aware of their liability exposure when operating the business.