Which legal structure provides the least legal protection for business owners?

The legal structure that offers the least protection for business owners is the sole proprietorship. This is primarily because, in a sole proprietorship, there is no legal distinction between the owner and the business entity. This means that the owner is personally liable for all debts and obligations incurred by the business. If the business faces lawsuits, financial issues, or other liabilities, the owner's personal assets—such as savings, property, and other personal possessions—can be at risk.

In contrast, other legal structures like limited liability companies (LLCs) and corporations create a legal separation between the business and the owners. This separation provides a shield that protects the owners' personal assets from business liabilities. Partnerships may also offer some level of shared liability protection, depending on the agreement between partners.

Due to this lack of protection in a sole proprietorship, it is vital for business owners to carefully consider their legal structure and potential liabilities when establishing a business.