Question

List three disadvantages to sole proprietorships.

Answer 1

Sole proprietorships have several disadvantages, including difficulty raising money, personal liability for the owner, and a limited lifespan.

Step-by-step explanation:

There are several disadvantages to sole proprietorships:

1. Difficulty raising money: Sole proprietorships may find it more challenging to secure funding for starting or expanding their business. Banks and investors may be less willing to lend money to sole proprietors compared to other forms of business ownership.
2. Personal liability: One major disadvantage of a sole proprietorship is that the owner has unlimited personal liability. This means that if the business incurs debts or faces legal action, the owner's personal assets may be at risk. The owner is personally responsible for any financial obligations or legal claims against the business.
3. Limited lifespan: Sole proprietorships are inherently tied to the owner's life. If the owner decides to retire, become incapacitated, or passes away, the business may cease to exist. The continuity and longevity of the business is dependent on the owner's involvement.

These are just a few of the disadvantages of sole proprietorships. It's important to carefully consider the pros and cons before choosing this form of business ownership.

Answer 2

unlimited liability is one of the main ones, It is difficult to find outside investors and you are liable for all of your own debts