State the demerits of proprietorship.
Answers
FOLLOWING ARE THE DEMIRITS
you have unlimited liability for debts as there's no legal distinction between private and business assets.
your capacity to raise capital is limited.
all the responsibility for making day-to-day business decisions is yours.
retaining high-calibre employees can be difficult.
HOPE IT HELPS MARK AS BRAINLIEST IF YOU LIKE BE BRAINLY
Explanation:
The demerits of proprietorship are -
- An unlimited personal liability - This means that the firm is personally liable for all the company's debts. This is the biggest risk of a sole ownership. A Court is expected to see all of the assets and liabilities, including private, non-business-related items, as a single group without having a separate agency for tax and legal concerns.
- Difficulty to get a business loan or credit line - As a sole proprietor, the firm needs to rely primarily on friends and family who already know them and have confidence in you. It is highly unlikely that a venture capitalist will be met willing to write a check to invest in a company that does not include a structured business.
- Temporary existence - There is no permanent existence of a sole proprietorship firm. If, for certain reasons, the business owner dies or becomes unable to take on the business and there is no heir or successor to his business, the business must automatically end. There is also no need for his successor to be able to run the company successfully, as he had done before.