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Which of the following is a disadvantage of operating as a sole proprietorship? 1--Sole proprietorships have...

Which of the following is a disadvantage of operating as a sole proprietorship? 1--Sole proprietorships have complex legal and accounting requeirements. 2--The owner of a sole proprietorship generally carries unlimited liability for the debts and liabilites of the business. 3-- A sole proprietorship has only limited flexiblity in choosing a tax year. 4--A sole proprietorship may consist of one or many individuals.

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Answer #1

Ans is 2--The owner of a sole proprietorship generally carries unlimited liability for the debts and liabilites of the business.

Explanation: Sole proprietorship as the name suggests a single person , so if any person wants to do business, he can do so by easily arranging funds and with a little legal formalities. And also he enjoys great freedom like others in choosing the tax year, only disadvantage associated with this form is the person or business can not be separated from each other. Suppose John is sole proprietor of his shop so business liabilities and risks are solely beard by John only no one is responsible for his liabilities. In this way he is responsible for liabilities in unlimited manner.   

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