Question

Which of the following is a disadvantage to choosing a sole proprietorship business structure?

Question 9 options:

The owner has personal responsibility for the company's liabilities.

The owner has to share the profits with partners.

The owner is still liable for personal debts.

The owner has to report to shareholders.

Answer 1

Which of the following is a disadvantage to choosing a sole proprietorship business structure? The owner has personal responsibility for the company's liabilities.

A sole proprietorship is the simplest business form that can be operated. A sole proprietorship is owned by one individual and they are responsible for all of the debts the company has. The business is ran by one person and there is no distinction between the person and the business, both fall under the same number (social security number) when filing taxes.

Answer 2

Answer A is the correct one. The owner has personal responsibility for the company's liability.

There are many forms of business. Some important forms are Partnership, Corporation, Limited Liability Company, Sole Proprietorship etc.

Sole Proprietorship is a form of business in which the whole business is owned by a single person. He is the one liable for everything happening to the business. He is solely responsible for the liabilities and the profits as well. So this is usually a disadvantage of being a single owner, that you are the only one liable for all losses that may incur.