Does sole proprietorship have unlimited liability in the UK?

Yes, in the UK, a sole proprietorship does have unlimited liability. This means that the sole proprietor (the owner of the business) is personally liable for all the debts and obligations of the business. Unlike limited companies, where the company is a separate legal entity and the personal assets of the shareholders and directors are generally protected, in a sole proprietorship there is no legal distinction between personal and business assets.

This unlimited liability implies that if the business incurs debt or faces legal claims which it cannot fulfill with its own assets, the owner's personal assets, such as their home, savings, or other valuables, can be used to settle those debts. This risk underscores the importance for sole proprietors to carefully manage their business finances and possibly consider insurance to mitigate potential liabilities.