Read each question and choose the best answer.

Question

Which advantage of a sole proprietorship could also be a disadvantage?
A. A sole proprietor has full control.
B. A sole proprietor can easily start a business.
C. A sole proprietor is the sole receiver of profit.
D. A sole proprietor has to follow relatively few regulations.

Answer 1

The best answer is: C. A sole proprietor is the sole receiver of profit.

While being the sole receiver of profit can be seen as an advantage, it can also be a disadvantage because it means that the sole proprietor bears all the financial risk and consequences of losses. If the business does poorly, they alone are responsible for any financial setbacks.