Which of the following is a realistic concern faced by the owners of sole proprietorships?(1 point)

Question

Responses

If the business becomes unprofitable, the owner will be held accountable by the board of directors.
If the business becomes unprofitable, the owner will be held accountable by the board of directors.

If the business becomes unable to pay its debts, the owner may have to sell personal assets to cover the debt payments.
If the business becomes unable to pay its debts, the owner may have to sell personal assets to cover the debt payments.

If the business becomes unable to pay its debts, shareholders will have to cover the debt payments.
If the business becomes unable to pay its debts, shareholders will have to cover the debt payments.

If the business becomes unprofitable, the general partner will be liable for any payments due.

Answer 1

The realistic concern faced by the owners of sole proprietorships is:

If the business becomes unable to pay its debts, the owner may have to sell personal assets to cover the debt payments.

In a sole proprietorship, there is no legal distinction between the owner and the business, which means that the owner's personal assets can be at risk if the business incurs debt.