Answer:

Limited access to capital 

A sole proprietorship also alluded to as a sole trader or a proprietorship, is an unincorporated business that has only one proprietor who pays personal annual tax on profits earned from the business. 

A sole proprietorship is the easiest kind of business to establish or take apart, because of a lack of unofficial law. As such, these kinds of organizations are popular among sole proprietors of organizations, individual self-contractors, and consultants. Many sole owners work together under their own names because creating a separate business or trade name isn't necessary. 

KEY TAKEAWAYS 

•          A sole proprietorship is an unincorporated business with just a single proprietor who pays personal annual tax on profits earned. 

•          Sole proprietorships are easy to establish and dismantle, because of a lack of government association, making them popular with small entrepreneurs and contractors. 

•          Many sole proprietorships wind up getting rebuilt into an LLC, in a state of harmony with the company's expansion.

A sole proprietorship has many advantages. It's easy to shape, doesn't cost much in legal expenses and the proprietor will keep all the profits. However, it has several disadvantages that a small entrepreneur ought to consider prior to choosing to operate as a sole owner. 

Liability Is Unlimited 

Without a doubt, the most genuine disadvantage of a sole proprietorship is the limitless openness to liabilities and lawsuits. In contrast to a corporation, the personal assets of the proprietor can be confiscated in case of adverse legal actions. The finances of the business and the proprietor are the same. The two are not legally separated. This means that the proprietor could lose his home, cars, bank account, and any other personal assets to settle any business obligations or bankruptcy. 

Hard to Raise Capital 

What happens when the business starts to develop and needs assets to help an expansion? Where will the cash come from? A sole proprietorship cannot raise capital by offering stock or utilizing different means to attract unrelated financial backers. The trouble of attracting outside capital powers the proprietor to depend on his own savings and loans from loved ones. 

Loan specialists Are Warier 

Banks are more worried about chances when making loans to a sole owner. Banks like to base their loans on a company's financial statements rather than having to think about the assets of the proprietor. Frequently, the credit score of the proprietor isn't adequate to fulfill the loan specialists' guidelines. 

Proprietor Controls Everything 

At the outset, the proprietor makes all the choices and does the majority of the work himself. Doing all may be well at the outset, yet this turns out to be more troublesome as the business develops and adds workers. Another unintended outcome of a sole proprietorship is that when the business develops and adds workers, the proprietor is usually the last individual allowed to take a vacation or appreciate a holiday. Representatives always will take their vacations, however, proprietors rarely get downtime. 

Liquidation of Business 

In the event that the proprietor passes away, the business will be liquidated. In contrast to a corporation, a proprietorship doesn't endure the proprietor except if he has made preparations to will the assets to somebody before his death. 

Starting a business as a sole proprietorship is enticing because it costs next to no and doesn't need a lot of documentation. Be that as it may, the proprietor ought to carefully think about the disadvantages of limitless liability and the troublesome of raising capital. These factors will turn out to be more genuine as a business develops.

Reference:

Permwanichagun, P., Kaenmanee, S., Naipinit, A., & Sakolnakorn, T. P. N. (2014). The situations of sole proprietorship, E-commerce entrepreneurs and trends in their E-commerce: A case study in Thailand. Asian Social Science, 10(21), 80.

Salikin, N., Ab Wahab, N., & Muhammad, I. (2014). Strengths and weaknesses among Malaysian SMEs: Financial management perspectives. Procedia-Social and Behavioral Sciences, 129, 334-340.

Kose, M. A., Ohnsorge, F., Ye, L. S., & Islamaj, E. (2017). Weakness in investment growth: Causes, implications and policy responses. The World Bank.