darrell is sure he would like to be a sole proprietor of his business but he knows he should weigh the pros and cons of that decision. What would be a disadvantage of sole proprietorship for Darrell
He would be the only owner and make all the
Decisions
He would be liable or legally responsible for all the debts
He would be subject to very few government regulation S
Or
He would be eligible to receive all after-tax income earned in the business
ABC or D
The correct answer would be B - He would be liable or legally responsible for all the debts.
The disadvantage of sole proprietorship for Darrell would be:
B) He would be liable or legally responsible for all the debts.
As a sole proprietor, Darrell would have unlimited personal liability for any debts or obligations incurred by the business. This means that if the business defaults on its debts or faces legal issues, Darrell's personal assets could be at risk.
The disadvantage of sole proprietorship for Darrell would be option B, "He would be liable or legally responsible for all the debts."
Explanation:
As a sole proprietor, Darrell would have complete control and decision-making power over the business, which is an advantage mentioned in option A. However, option B points out that he would also be personally responsible for all the debts and liabilities incurred by the business. This means that if the business faces financial difficulties or legal issues, Darrell's personal assets could be at risk to satisfy those debts.
Option C, "He would be subject to very few government regulations," is actually incorrect. Sole proprietorships are subject to the same government regulations as any other business entity, including taxation, licensing, and compliance with local, state, and federal laws and regulations. So, this cannot be considered a disadvantage.
Option D, "He would be eligible to receive all after-tax income earned in the business," is actually an advantage of sole proprietorship. Unlike other business entities, where profits are typically shared among multiple owners, as a sole proprietor, Darrell would be entitled to all the profits after paying taxes.
Therefore, the correct disadvantage would be option B.