Which of the following is a disadvantage of owning a sole proprietorship?

Owning a sole proprietorship comes with the significant disadvantage of unlimited liability. This means that the owner is personally responsible for all debts and liabilities of the business. If the business incurs debts or faces legal actions, creditors can pursue the owner's personal assets, such as savings accounts, real estate, and personal property, to satisfy business obligations. This lack of separation between personal and business finances poses a substantial risk to the owner, which can be particularly concerning if the business faces financial difficulties or legal troubles.

In contrast, advantages such as limited taxation, ease of management, and complete control are characteristics that make sole proprietorships appealing. Limited taxation indicates that profits are only taxed once as personal income rather than at the corporate level. Ease of management relates to the straightforward nature of running the business independently, where decisions can be made quickly without needing to consult partners. Complete control gives the owner the autonomy to make all decisions regarding business operations and direction without needing to consult anyone else. However, these positives do not mitigate the significant risk associated with unlimited liability, making it a crucial factor to consider when evaluating this business structure.