Concept:A sole trader has no legal separation between personal and business assets, so personal property can be used to pay business debts.
Explanation:In a sole proprietorship, the owner and the business are treated as the same legal entity.
This means all business debts are also personal debts of the trader.
If the business is liquidated and cannot repay its creditors, the trader’s personal belongings such as a house, car, or savings may be taken.
Unlike a registered company, a sole trader does not have the protection of limited liability.
Thus, unlimited liability is a major disadvantage of this form of business ownership.
Paying tax is not a specific disadvantage, and limited liability is actually an advantage.
Not sharing profit is a benefit, not a drawback.
Answer:C. has unlimited liability