Most businesses in the United States are sole proprietorships.Most sole proprietors pay ________ on their profits.

Question

Quizplus · Accepted Answer

As sole proprietors are not separate legal entities from their owners, their profits are taxed as personal income on the owner's individual tax return. Therefore, most sole proprietors pay the federal personal income tax on their profits. Option A is incorrect because the corporate income tax is levied on corporate entities, not sole proprietorships. Option C is incorrect because the progressive excise tax is imposed on specific goods or services, not on the profits of businesses. Option D is also incorrect because all income, including profits from sole proprietorships, is subject to taxation in the United States.

Most Businesses in the United States Are Sole Proprietorships