Question

31.
The following is a scenario about starting a business:

Marcus started mowing lawns and decided to start a landscaping business. He enjoys being outside, and customers appreciate his work. As his business expanded, he decided to purchase a riding lawnmower. He does not have the money to purchase the lawnmower outright, so he takes out a loan at the bank. Just after making this purchase, Marcus's mother is diagnosed with Stage 4 cancer. She has several doctor appointments and hospital visits and needs Marcus' help driving her places or caring for his little sisters. As a result, he cannot fulfill very many of the landscaping jobs he agreed to do. His income decreases, and he must use his personal savings to pay the loan for the lawnmower. After his mom passed away, there were many additional expenses he did not anticipate. The downturn in his ability to work for his business led to him defaulting on the loan, negatively impacting his credit score.

Which of the following best explains the disadvantage Marcus faced as a sole-proprietor in his landscaping business?

Select {responseValue}
He had problems partnering with a bank.

Select {responseValue}
The business was difficult to start up and manage.

Select {responseValue}
He has unlimited liability for all debts.

Select {responseValue}
He was not permitted to hire any employees for help.

Answer 1

He has unlimited liability for all debts.

As a sole proprietor his personal assets and credit are responsible for business debts (the loan/default affected his personal finances).