Among the disadvantages of the one-man business is the fact that______

Step 1: Analyze the question The question asks for a disadvantage of a one-man business (sole proprietorship), which is a business owned and run by one person.

Step 2: Key concept: unlimited liability A sole proprietor and the business are legally the same person. The business has no separate legal identity, so:

• The owner has unlimited liability: if the business cannot pay its debts, creditors can claim the owner's personal property (house, car, savings).
• This is the most commonly tested disadvantage of sole proprietorship, along with limited capital, lack of continuity, and heavy workload.

Step 3: Check each option

• A. Capital may not be increased without government permission. False. A sole proprietor can inject more of their own money or borrow without government approval.
• B. The proprietor is personally liable for the firm's debts. True. This is unlimited liability, a major disadvantage.
• C. The proprietor is not able to obtain credit. False. A sole proprietor can obtain credit, though it may be limited by the small size of the business.
• D. The proprietor may not sue for bad debts. False. The proprietor is the business in law, so they can sue debtors directly.

Step 4: Answer

Exam tip: Remember "one man, one liability". In a sole proprietorship, the owner and the business are one, so the owner's personal assets are at risk. Limited liability only comes with registered companies (Ltd or PLC).