Which one of the following statements concerning a sole proprietorship is correct?
A) A sole proprietorship is the least common form of business ownership.
B) The proﬁts of a sole proprietorship are taxed twice.
C) The owners of a sole proprietorship share proﬁts as established by the partnership agreement.
D) The owner of a sole proprietorship may be forced to sell his/her personal assets to pay company debts.
E) A sole proprietorship is often structured as a limited liability company.

Question

Quizplus · Accepted Answer

The owner of a sole proprietorship is personally liable for the company's debts, which means that personal assets can be seized to pay off business debts. This makes it important for sole proprietors to consider the risks and potentially limit liability through insurance or other means. Option A is incorrect as sole proprietorships are the most common form of business ownership. Option B is incorrect as the profits of a sole proprietorship are only taxed once as they are considered personal income. Option C is incorrect as sole proprietorships do not have partners to share profits with. Option E is incorrect as a sole proprietorship is not a limited liability company, but rather it is an unincorporated business owned and run by one person.

Which One of the Following Statements Concerning a Sole Proprietorship