GROWTH DEVELOPMENT CHILD
DEVELOPMENT AND LEARNING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Sole trader
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partnership
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Sole trader disadvantages
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Sole trader advantages
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Detailed explanation-1: -Disadvantages. Sole traders take on all the risks of starting their own business and have the disadvantage of unlimited liability . A sole trader is liable for the organisation’s debt. This means that personal assets such as a car or house are at risk of being sold to pay off business debts.
Detailed explanation-2: -Unincorporated businesses such as sole traders have unlimited liability. In other words, the individual who has started the business will be personally liable for business debts until they choose to incorporate.
Detailed explanation-3: -Sole proprietorships do not have the protection of limited liability. Instead, the sole owner has unlimited liability. This means that the sole owner is personally liable for the debts and expenses of the business. If the business is sued, the sole owner risks losing their personal assets.
Detailed explanation-4: -As a sole trader, the business owner and company are one and the same for legal purposes. So, you are liable for all company debts. The proprietor bears any liabilities or obligations owed by the business, so there’s an increased risk that it will impact your personal finances and assets if the company fails.