Question

A key reason most sole proprietorships remain relatively small is that:

Answer 1

Answer:

A. They have limited ability to raise funds needed to finance Growth

Explanation:

What is a Sole Proprietorship

A sole proprietorship represents a business that owned and run mostly by an individual who has the responsibility of paying income tax on any profit generated by the business. Sole Proprietorship is also a very popular form of business around the world.

Characteristics of a Sole Proprietorship

• It is usually owned by an individual who is responsible for its profits as well as its risks
• Sole Proprietorships are easy to set-up due to its simple management and ownership structure
• Due to the singular ownership decision making is limited to the capacity of the owner
• Since it is unincorporated, a sole proprietorship has limited access to capital for expansion such as gearing and the stock market option of getting shareholders. As such, the capital of a sole proprietorship is limited to personal savings, borrowing based on limited collateral, grants and gifts from friends and family.