A sole proprietorship:
A)provides limited liability for its owner.
B)involves significant legal costs during the formation process.
C)has an unlimited life.
D)has its profits taxed as personal income.
E)can generally raise significant capital from nonowner sources.

Question

Quizplus · Accepted Answer

A sole proprietorship is not a separate legal entity, and therefore the profits are taxed as personal income for the owner.

Answer: C 
 A sole proprietorship has an unlimited life as it is not a separate legal entity, and its existence depends on the owner.

Answer: A, B, and E are incorrect. 
 A sole proprietorship does not provide limited liability for its owner, involves minimal legal costs during the formation process, and generally cannot raise significant capital from nonowner sources as it is not a separate legal entity.

A Sole Proprietorship