In regard to business entities, which type of entity is personally liable for their own actions as well as the actions of employees?

A sole proprietor is personally liable for their own actions as well as the actions of their employees because there is no legal distinction between the individual and the business entity. In this structure, the business is owned and operated by one individual, which means that any debts or liabilities incurred by the business directly affect the owner's personal assets. This includes legal actions taken against the business, where the owner can be held personally responsible.

In contrast, a corporation is a separate legal entity that limits the personal liability of shareholders for the actions of the business. A general partnership, while also involving shared liabilities among partners, does not offer the same level of personal liability protection as a corporation. Limited partnerships provide limited liability protection to certain partners, but general partners still hold personal liability for business operations. Therefore, the sole proprietorship's lack of legal separation from the owner is what makes personal liability a defining characteristic of this business entity.