The Liability of a ‘Sole trader’ is Unlimited.
Justify the following statement :
The Liability of a ‘Sole trader’ is Unlimited.
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1. One of the main features of a sole traders is unlimited liability.
2. If the sole trader becomes insolvent and if his business assets are insufficient to pay off his business debts, he will have to use his private property in order to pay off his creditors.
3. There is no distinction between business property and private property in case of a sole trading concern.
4. Thus, liability of a sole trader is unlimited.
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