A primary reason to open a business as a sole proprietorship instead of forming a corporation for business ownership is that:
A)finding managers is easier in a sole proprietorship.
B)it is easier to obtain bank and small business loan funding as a sole proprietorship.
C)a sole proprietorship avoids double taxation of the owner and business.
D)a sole proprietorship provides limited liability for the owner.

Question

Quizplus · Accepted Answer

One of the primary reasons to open a business as a sole proprietorship instead of forming a corporation is to avoid double taxation of the owner and business. With a corporation, both the owner and the business can be taxed separately, which can result in a higher tax burden. As a sole proprietorship, the business income and expenses are reported on the owner's personal tax return, so there is no separate tax for the business itself.

A Primary Reason to Open a Business as a Sole