Which among the following is a disadvantage of sole proprietorships?
A) Its owner gets no specific tax advantages.
B) Its owner has to share control with others.
C) Its owner has to share profits.
D) Its owner has unlimited liability for the firm's debt.

Question

Quizplus · Accepted Answer

The most significant disadvantage of a sole proprietorship is that the owner has unlimited liability, meaning that their personal assets are at risk if the business incurs debts or is sued. This makes it a risky business structure, especially if the business is growing or dealing with large sums of money. Choice A is incorrect because a sole proprietorship may be eligible for some tax advantages, such as deductions for business expenses. Choice B is incorrect because a sole proprietorship is solely controlled by its owner. Choice C is also incorrect because sole proprietorship entails keeping all profits for the owner's benefit.

Which Among the Following Is a Disadvantage of Sole Proprietorships