Question

In sole proprietorship, how unlimited liability is harmful to the owner? ​

Answer 1

Answer:

Explanation:

A Sole proprietorship can be explained as a kind of business or an organization that is owned, controlled and operated by a single individual who is the sole beneficiary of all profits or loss, and responsible for all risks. It is a popular kind of business, especially suitable for small business at least for its initial years of operation. This type of businesses is usually a specialized service such as hair salons, beauty parlours, or small retail shops.

• It is that type of business organization which is owned, managed and controlled by a single owner.

• The word “sole” means “only” and “proprietor” notes to “owner”.

• A sole proprietor is the beneficiary of all profits.

• All risks are to be borne by the sole proprietor.

• The sole proprietor has unconditional and full control over its business.

• Example: Beauty parlour, barbershop, general store and sweet shop run by a single owner

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