Question

15 POINTS!!! HELP - QUICK!!!

Which disadvantages can happen in a sole proprietorship?
Choose exactly two answers that are correct.

Making operational changes is challenging.

An owner is personally liable for business debts.

All profits go to shareholders.

Raising financial capital is difficult.

Answer 1

(An owner is personally liable for business debts.)
Meaning that if something goes wrong the business owner has to find a way to fix it by possibly selling their home or other things they own.

(All profits go to shareholders)

Answer 2

The disadvantages of sole proprietorship are that the liability is unlimited, i.e. personal assets can be used to pay the debts and the profit goes to the shareholders.

What is sole proprietorship?

It is common business structure to start a business. It is an unincorporated business entity owned by an individual, hence there is no distinction between the owner and the business.

The disadvantages of sole proprietorship are:

• The owner is personally liable for business debts, i.e. owner's liability is unlimited if the business suffer loss his personal assets can be used to pay the debts.
• The shareholders get all the profits.

Therefore, it can be said that option B and C are the disadvantages of sole proprietorship.

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