500
There are several disadvantages to operating a sole proprietorship. Name any three.
The owner of a Sole Proprietorship is exposed to unlimited liability.
He is responsible for ALL debts and obligations of the business
He is liable for ALL torts committed by him or his agents (acting within the scope of employment)
There is no protection for the owner’s personal assets!
Creditors can go after the business’s assets AND the owner’s personal assets.
Insurance may help….
If the owner dies or simply stops doing business, the business itself terminates.
Limited Ability to attract highly qualified employees
Difficulty in Transferring Proprietary interest
Sole proprietorships are difficult to sell because the nature of the business is so closely linked to the owner. The individual assets of the business may have little value without the owner himself.
Limited Ability to Raise Capital