Raul was a fitness fanatic. If he wasn’t out for a run or a bike ride,

QUESTION

Raul was a fitness fanatic. If he wasn’t out for a run or a bike ride, he was at the gym lifting weights and building muscle. He decided to open a fitness studio, thinking he would be a natural at running such a business.

But Raul hadn’t counted on the responsibility of keeping records, meeting IRS deadlines, withholding taxes from employees’ paychecks, and so on. The business didn’t generate enough revenue for Raul to afford to hire someone to take care of these issues for him. Raul had to close the business. Which of the drawbacks of being a sole proprietorship did Raul experience?
A) having unlimited financial liability
B) having limited financial resources and few fringe benefits
C) having management problems
D) being unable to franchise
E) not being able to sell or pass along the business

ANSWER

Answer: C
Explanation: C) Raul did not have the management skills or the managerial discipline to do the necessary paperwork to keep his business alive.