Author Question: Identify and explain two advantages and two disadvantages of sole ... (Read 44 times)

fahad · **on:** Jul 14, 2018

Identify and explain two advantages and two disadvantages of sole proprietorships.

Question 2

Darrell inherited a large amount of money from his uncle. Darrell wishes to start his own business, and his lawyers encourage him to make it a corporation. What disadvantage of a sole proprietorship are the lawyers trying to avoid?
A) Unlimited liability
B) Lack of management skills
C) Retention of all profits
D) Lack of money
E) Double taxation

fwbard · **Reply #1 on:** Jul 14, 2018

Answer to Question 1

Sole proprietorships offer the following advantages:
It is the simplest and least expensive form of ownership to establish.

It offers the owner the greatest degree of control when it comes to running the business. The sole proprietor doesn't have to seek the approval of other owners.

The following are the disadvantages of sole proprietorships:

Because the firm is simply an extension of the owner, a sole proprietor has unlimited liability for the debts of the business.

Sole proprietorships can also face difficulties in raising money to finance growth from banks and other financial institutions. Suppliers often won't provide supplies on credit.

Answer to Question 2

A