Which of the following statements is true regarding sole traders? A) They have unlimited personal liability. B) They can own assets in the name of the business. C) They are always... Which of the following statements is true regarding sole traders? A) They have unlimited personal liability. B) They can own assets in the name of the business. C) They are always large-scale operations. D) They have no financial limitations.
Understand the Problem
The question is asking which statement about sole traders is true. We need to evaluate each option to determine the correct one.
Answer
They have unlimited personal liability.
The final answer is they have unlimited personal liability.
Answer for screen readers
The final answer is they have unlimited personal liability.
More Information
Sole traders, or sole proprietors, have unlimited personal liability. This means they are personally responsible for all the debts and obligations of the business, and their personal assets can be used to satisfy business debts.
Tips
Confusing the liability of sole traders with that of limited liability companies is common. Sole traders have no legal distinction between personal and business assets, unlike LLCs.
Sources
- What Does Unlimited Liability Mean, and Which Businesses Have It? - investopedia.com
- 6. Chapter 6 Forms of Business Ownership - VIVA's Pressbooks - viva.pressbooks.pub
- Single-Member LLC vs. Sole Proprietorship - Wolters Kluwer - wolterskluwer.com
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