Question

A major disadvantage of the sole proprietorship is:

a. the sole proprietor obtains all of the profits.
b. no organizational fees.
c. the sole proprietor is free to make all business decisions concerning operation of the sole proprietorship.
d. the sole proprietor is personally liable for the debts of the sole proprietorship.

Answer 1

The major disadvantage of a sole proprietorship is that the owner is personally liable for the business's debts and obligations, potentially risking personal assets. Therefore, the correct option is D.

Step-by-step explanation:

A major disadvantage of the sole proprietorship is d. the sole proprietor is personally liable for the debts of the sole proprietorship. In a sole proprietorship, the business is not a separate legal entity from the owner, meaning all debts and legal obligations of the business fall on the individual. If the business fails or is sued, the owner's personal assets are at risk. This contrasts with other business structures, like corporations, where liability is limited and the entity is separate from its owners.