Darrell is sure he would like to be a sole proprietor of his business, but he knows he should weigh the pros and cons of that decision. What would be a disadvantage of sole proprietorship for Darrell?

Question

A. He would be the only owner and make all the decisions
B. He would be liable or legally responsible for all debts
C. he would be subject to very few government regulations
D. He would be eligible to receive all after-tax income earned in the business

Answer 1

The disadvantage of sole proprietorship for Darrell would be:

B. He would be liable or legally responsible for all debts.

As a sole proprietor, Darrell would not have limited liability protection, meaning he would be personally responsible for any debts or obligations incurred by the business. This can put his personal assets at risk if the business faces financial difficulties.