Final answer:
A sole proprietorship has disadvantages including unlimited liability, limited access to capital, limited managerial expertise, and lack of continuity.
Step-by-step explanation:
Operating as a sole proprietorship has several disadvantages:
- Unlimited liability: The owner is personally liable for all the debts and liabilities of the business, which puts their personal assets at risk.
- Limited access to capital: Sole proprietors have limited options for raising capital, making it difficult to expand or fund large projects.
- Limited managerial expertise: As a sole proprietor, all business decisions and responsibilities rest on the owner, who may not possess expertise in all areas of the business.
- Lack of continuity: The business is dependent on the owner, and if they become incapacitated or pass away, the business may cease to exist.
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