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Question 13 (5 points)

Which of the following is a disadvantage of choosing a sole proprietorship business structure?

A. The owner has personal responsibility for the company's liabilities.
B. The owner has to share the profits with partners.
C. The owner is still liable for personal debts.
D. The owner has to report to shareholders.



Answer :

GinnyAnswer

Final answer:

Choosing a sole proprietorship business structure entails personal liability for the owner, risking personal assets in case of company liabilities.


Explanation:

One of the disadvantages of choosing a sole proprietorship business structure is that the owner has personal responsibility for the company's liabilities. This means that if the business faces financial difficulties or legal issues, the owner's personal assets could be at risk.

For example, in the event of bankruptcy or a lawsuit, the owner's personal wealth, such as savings or property, could be used to settle the company's obligations.

This personal liability is a significant drawback compared to other business structures like corporations, where owners enjoy limited liability protection.


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