Question

what is the main drawback of a sole proprietorship?
they are responsible to shareholders
they are easy to create
they require a partner
they have unlimited personal liability

Explanation:

A sole proprietorship is a business owned and run by one individual. The key characteristic is that the owner has unlimited personal liability. This means if the business incurs debts or legal obligations, the owner's personal assets (like savings, property) can be used to satisfy those obligations.

• "They are responsible to shareholders" is incorrect as sole proprietorships don't have shareholders (that's a feature of corporations).
• "They are easy to create" is an advantage, not a drawback.
• "They require a partner" is wrong because a sole proprietorship is owned by one person.

Answer:

They have unlimited personal liability