Explain one disadvantage of a sole trader having unlimited liability

Unlimited liability is when the business and it's owner are viewed as the same legal entity, and therefore any debts that the business runs itself into must be paid for and dealt with by the business owner. This means that the business owner is solely liable for the business' debts and this is a major disadvantage, as this may meant that the business owner can be taken to court and have their own personal belongs seized until the business' debts have been paid for. As a result, unlimited liability for a sole trader comes with a higher level of risk, as the business owner could lose everything in trying to pay off the business' debts.

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Answered by Gemma A. Business Studies tutor

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