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unlimited liability as it relates to sole proprietorships is the risk of loss of assets beyond the assets of the business.

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The risk of loss of assets beyond the assets of the business is referred to as unlimited liability. It is one of the characteristics of a sole proprietorship.

A sole proprietorship is a form of business organisation is which only person owns the business.  

Characteristics of a sole proprietorship

  • it is owned by one person
  • the business has unlimited liability. It means that the owner of the business is liable to the liabilities her business.  
  • the business usually lacks continuity. this type of business usually ceases to exist when the owner dies.

Advantages of sole proprietorship

  • It is easy to establish.  
  • The business owner has complete control over the business.  

Disadvantages of sole proprietorship

  • The lifespan of the business is often limited to the lifespan of its owner.
  • The owner has an unlimited liability.

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