Question

Justify the liability if a sole trader is unlimited

Answer 1

Answer:

I don't have any idea about business

Answer 2

A sole trader or sole proprietor is basically a single and only owner of any business enterprise or organisation who assumes unlimited business risks and liabilities incurred due to normal business operation.

Explanation:

For a single trader or proprietorship,the financial liabilities in business are concentrated only on one individual and not divided or distributed.This basically entails that the single trader or business owner has to fulfill all the liabilities incurred during the course of business operation and the investors or creditors can take legal actions on him or her,in the circumstance of any unfulfilled financial liability/s.Hence,the singe trader or owner is essentially answerable or liable to all the concerned parties in the business such as capital investors,creditors,customers,distributors,wholesalers and so forth.Therefore,majority of the risks associated with single trading or business rests solely on the respective owner or trader.In the case of partnership businesses,much of the business risks and liabilities are divided among the concerned partners.However,for a single trader or business owner,he or she has to assume complete and unlimited responsibility for any business risk or liability.