Question

One of the major disadvantages of a sole proprietorship is ____

A. the simplicity of decision making.
B. high operating costs.
C. high organizational costs.
D. that there is unlimited liability to the owner.

Answer 1

The major disadvantage of a sole proprietorship is that the owner has unlimited liability, meaning they are fully responsible for debts and legal claims against the business.

Step-by-step explanation:

One of the major disadvantages of a sole proprietorship is D. that there is unlimited liability to the owner. This means that the owner is personally responsible for all of the debts and obligations of the business. In a sole proprietorship, the business is not a separate legal entity from the owner, thus any debts or legal actions against the business could potentially impact the owner's personal assets, including savings and property. The simplicity of decision making in a sole proprietorship can be seen as an advantage rather than a disadvantage, whereas high operating costs and high organizational costs are more commonly associated with larger or different types of business structures, such as corporations.