A significant disadvantage of owning a sole proprietorship is the
A) possibility of limited liability.
B) heavy tax liability that must be assumed.
C) overwhelming time commitment often required of the owner.
D) lack of incentives to motivate the owner.

Question

Quizplus · Accepted Answer

As a sole proprietor, the owner is solely responsible for the business and all of its operations, which can result in an overwhelming time commitment. This means the owner must wear many hats and handle all aspects of the business, such as accounting, marketing, and management. This can lead to burnout and reduced work-life balance. Additionally, there is no separation between personal and business liability, which means the owner is exposed to potential financial risks and lawsuits. However, owning a sole proprietorship does have the advantage of being easy to set up and control, as well as having less paperwork and lower costs compared to other business structures.

A Significant Disadvantage of Owning a Sole Proprietorship Is the