Which of the following statements is correct?
A) Sole proprietorships are easy to start.
B) If the sole proprietorship gets sued, the owner is not liable.
C) It is relatively easy for sole proprietorships to raise money.
D) Profits from the sole proprietorship are subject to double taxation.

Question

Quizplus · Accepted Answer

Sole proprietorships are known for their simplicity and ease of formation, making them a popular choice for individual entrepreneurs. Unlike corporations, the owner of a sole proprietorship is personally liable for all debts and legal actions against the business, making option B incorrect. Raising money can be more challenging for sole proprietorships because they cannot issue stock and may have limited options for securing loans, which makes option C incorrect. Profits from a sole proprietorship are taxed only once, as they are considered personal income of the owner, thus option D is also incorrect.

Which of the Following Statements Is Correct