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

Question

Quizplus · Accepted Answer

As a sole proprietorship is not a separate legal entity from its owner, the owner is personally liable for all company debts, which means that personal assets may have to be sold to pay those debts. The other statements are incorrect: A is incorrect because a sole proprietorship is not typically structured as a limited liability company; C is incorrect because a sole proprietorship consists of only one owner, not multiple owners as in a partnership; D is incorrect because the profits of a sole proprietorship are taxed only once as personal income of the owner; and E is incorrect because a sole proprietorship is one of the easiest and least expensive forms of business to create.

Which One of the Following Statements Concerning a Sole Proprietorship