ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Unlimited liability makes the owners legally responsible for all the debts and liabilities of the business. In a business with unlimited liability, both the business and personal assets of the owners may be at risk.

Detailed explanation-2: -Unlike corporations, sole proprietorships have unlimited liability and are legally responsible for all debts made against the business. With unlimited liability, business and personal assets may be at risk.

Detailed explanation-3: -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-4: -The biggest disadvantage of a sole proprietorship is that this business structure comes with no protection for the business’s owner against business-incurred liabilities, such as overwhelming business debt or being sued.

Detailed explanation-5: -Unlimited Personal Liability. One of the most serious disadvantages of a sole proprietorship is unlimited liability. Difficulty in Raising Capital. Big corporations can raise capital by selling shares or attracting investors. Lenders Don’t Lend. The Business Dies with You. Small Scale Economies. 14-Feb-2022