The disadvantages of sole proprietorships are evident in the high number of bankruptcies that occur in new businesses.

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Sole proprietorships have unlimited liability, meaning the owner is personally responsible for all debts and financial obligations of the business. Therefore, if the business fails, the owner's personal assets can be seized to pay off the debts. This risk can lead to a higher likelihood of bankruptcy, compared to other business structures such as LLCs or corporations.

The Disadvantages of Sole Proprietorships Are Evident in the High