ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Can sell shares on the stock market, can share responsibility with others
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Limited liability, has to register as self-employed, more responsibility
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Unlimited liability, more flexibility, less conflict with other owners
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None of the above
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Detailed explanation-1: -Another key feature of a sole proprietorship is that it carries unlimited liability. Unlimited liability means that the sole proprietor is personally liable for the business’ debts and liabilities. Importantly, the business is not a separate entity. Instead, the sole proprietor and the business are one and the same.
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: -More Flexibility One of the long-term benefits of being a sole trader is flexibility, more so than limited companies. A limited company transitioning from its current status to being a sole trade would require the business owner to dissolve his company and step down as the company director or CEO.