Question

A sole trader has a limited liability. True or False? Why?

Answer 1

A sole trader has a limited liability - False statement.

Features of a sole trader are, owning a business and also controlling it single handedly.

Controlling it single handedly doesn’t mean that they can’t employ anyone.

They can employ others but only they will be held liable for all debts they have made for the business and must pay those debts themselves.

The employees or anyone else can’t be held responsible.

So, a sole trader has unlimited liability.