Final answer:
The disadvantage in a sole proprietorship where the owner is responsible for all debts and obligations is known as unlimited liability, putting personal assets at risk.
Step-by-step explanation:
In a sole proprietorship, any debts or damages incurred by the business that cannot be paid by the business assets are indeed personal debts, and the owner must pay them. This disadvantage is known as unlimited liability. Unlimited liability means that the owner is personally responsible for all the debts and obligations of the company, putting personal assets like homes or savings at risk in the event of the business failing or facing legal issues. Unlike a limited liability partnership or a corporation, where personal assets are generally protected, a sole proprietor faces the potential of losing personal assets in the event of bankruptcy or a lawsuit.