A major disadvantage of sole tradership isQuestion 17Answera.Unlimited Liabilityb.Easy formationc.Large Lifed.Secrecy

Break Down the Problem

1. Identify the main issue: Disadvantages of a sole proprietorship.
2. List the options provided to determine which one represents the major disadvantage.

Relevant Concepts

• Unlimited Liability: This refers to a business structure where the owner is personally responsible for all debts and obligations.
• Easy Formation: Refers to how simple it is to set up a sole proprietorship.
• Large Life: This typically implies long-term existence; however, sole proprietorships often cease to exist when the owner passes away or decides to close it.
• Secrecy: While sole proprietorships can maintain a level of privacy in their operations, this does not necessarily classify as a major disadvantage.

Analysis and Detail

1. Unlimited Liability: This is a key inherent risk for sole proprietors, as personal assets can be pursued to settle business debts, representing a significant disadvantage.
2. Easy Formation: This is typically an advantage rather than a disadvantage.
3. Large Life: This could be seen as a disadvantage since sole proprietorships are linked closely to the owner.
4. Secrecy: While it may offer some benefits, it is less impactful than the financial risks associated with unlimited liability.

Verify and Summarize

Considering the definitions and implications of each option, unlimited liability stands out as the primary disadvantage due to the significant personal risk it poses.

Final Answer

a. Unlimited Liability