Practice question · Multiple choice
A sole proprietor’s café fails owing 60,000€ the business cannot pay. What happens?
Hints
- The key word is unlimited liability.
- In this legal form there is no separation between business and personal wealth.
Show the answer
A. Creditors can pursue the owner’s personal assets for the full debt
Why
A sole proprietorship has no legal wall between owner and business: personal savings, car, even home can answer for the 60,000€. That risk is precisely what limited-liability forms were invented to cap.
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