Main disadvantage of the sole proprietorship

Question

What is the main disadvantage of the sole proprietorship?

Answer 1

The main disadvantage of the sole proprietorship is unlimited personal liability, which means that third parties are entitled to take the sole proprietors personal assets, as well as the assets of the business, to satisfy the business’s obligations. Business Law Notes.

Sole proprietorship is easy to form and has few legal requirements. An HST number may be required depending on the type of business and if the supply of HST taxable goods/services exceeds $30,000. As well, the Business Names Act requires the proprietor to register the business name if he is carrying on business using a name other than his legal name e.g., Perfect Hair Styles. Registration would have to be done in every province/territory in which the business operates. Finally, depending on the type of activity being carried out by the business, a business licence may be needed. For example, a municipal licence is required by taxi drivers, electricians, and restaurant operators. A provincial licence is needed by real estate agents, car dealers, insurance brokers, and securities brokers.