Which of the following statements is the most accurate? Sole proprietorships:
A) are well suited for people who want to own a business and share in its profits without taking an active role in management.
B) are taxed at the owner's personal tax rate.
C) are the least risky form of business ownership.
D) must receive a state charter before they can legally conduct business.

Question

Quizplus · Accepted Answer

Sole proprietorships are taxed at the owner's personal tax rate because the business is not considered a separate legal entity from the owner. Therefore, the owner is responsible for reporting all income and losses on their personal tax return. Option A is incorrect because sole proprietors are responsible for the day-to-day operation and management of their business. Option C is incorrect because sole proprietorships have unlimited liability, which can be a significant risk factor for the owner. Option D is incorrect because sole proprietorships do not need to receive a state charter to legally conduct business.

Which of the Following Statements Is the Most Accurate? Sole