Why is the concept of unlimited liability a concern for the sole proprietor?
What will be an ideal response?
Unlimited liability is a legal concept that holds a business owner personally responsible for all the debts of the business. Debts of the business are not legally separated or different from the debts of the sole proprietor. Therefore, if the business is involved in a lawsuit or sustains substantial loss or debt, the sole proprietor is legally responsible and personal assets can be seized to pay creditors. Unlimited liability is perhaps the major factor that tends to discourage would-be entrepreneurs with substantial personal wealth from using the sole proprietor form of business organization.
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