One of the demerits of sole trading is

One of the demerits of sole trading is unlimited liability. This means that the owner of the business is personally liable for all the debts and losses incurred by the business. This implies that the owner's personal assets may be used to settle the debts of the business. In other words, if the business is sued, the owner's personal savings, car, house, and other assets may be seized to pay off the debts. This is different from other forms of business ownership, such as corporations, where the owners are only liable for the amount they have invested in the business. Therefore, unlimited liability makes sole trading a risky venture, and this is one of its major demerits.