PRC-3 · Chapter 2 · Question 53 of 61
A major disadvantage of operating a business as a Sole Proprietorship is the concept of unlimited liability. What does this mean for the owner?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The owner is legally indistinguishable from the business, meaning personal assets are at risk to pay business debts
Explanation
Unlimited liability means the law does not view the owner and the business as separate; if the business fails, the owner's personal wealth can be seized by creditors.
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