True or false: Two disadvantages of a proprietorship are (1) the relative difficulty of raising new capital and (2) the owner’s unlimited personal liability for the business’ debts
True
True.
Explanation:
1) Proprietorships often face difficulty in raising new capital as they do not have the option of issuing shares of stock to raise funds unlike corporations. This limits their ability to expand or grow the business.
2) In a proprietorship, the owner has unlimited personal liability for the business debts. This means that if the business is unable to pay its debts, the owner’s personal assets can be seized to pay off the debts. This can put the owner’s personal financial security at risk.
More Answers:
Understanding Limited Liability: The Importance of Legal Protection for Company OwnersError 403 The request cannot be completed because you have exceeded your quota. : quotaExceeded