The liability of a soletrader is:
a) Limited only to his investment in the business
b) Limited to total property of the business
c) Unlimited
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c) Unlimited.
A sole trader has position in an organisation which is nothing different from that of a legal owner.
Therefore, it is he who has to look after the expenses and debts of the organisation.
If the needs arise, then he will also have to pay the debts and taxes from his personal earnings, since he is the sole person to take responsibility and also enjoy the profits.
This is known as unlimited liability, and a sole trader is a person who possesses the same.
A sole trader has position in an organisation which is nothing different from that of a legal owner.
Therefore, it is he who has to look after the expenses and debts of the organisation.
If the needs arise, then he will also have to pay the debts and taxes from his personal earnings, since he is the sole person to take responsibility and also enjoy the profits.
This is known as unlimited liability, and a sole trader is a person who possesses the same.
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