Maria has a lot of self-confidence and business knowledge. She recently opened a bakery as a sole proprietor. She is expecting a high level of profits and is looking forward to:
A) the lower corporate tax rate paid by sole proprietorships.
B) keeping all of the money she earns except for the taxes she is required to pay.
C) keeping all of the money she earns since she does not have to pay taxes as a sole proprietor.
D) easily raising additional large sums of money from the capital markets since she is a sole proprietor.

Question

Quizplus · Accepted Answer

As a sole proprietor, Maria is the only owner of her business and is entitled to keep all of the profits earned by the business. However, she is required to pay taxes on her business income, but she can keep all of the money she earns except for what she owes in taxes. The lower corporate tax rate is not applicable to sole proprietorships, and raising large sums of money from capital markets can be difficult as a sole proprietor since they are not corporations and do not have shareholders.

Maria Has a Lot of Self-Confidence and Business Knowledge