Maria has a lot of self-confidence and business knowledge.She recently opened a bakery as a sole proprietor.She is expecting a high level of profits and is looking forward to:
A)The lower corporate tax rate paid by sole proprietorships.
B)Keeping all of the money she earns except for the taxes she is required to pay.
C)Keeping all of the money she earns since she does not have to pay taxes as a sole proprietor.
D)Easily raising additional large sums of money from the capital markets since she is a sole proprietor.

Question

Quizplus · Accepted Answer

As a sole proprietor, Maria will get to keep all of the money she earns (minus taxes), as there is no legal distinction between her and the business. However, she still has to pay taxes on her income. The lower corporate tax rate (A) does not apply to sole proprietorships. Sole proprietorships also cannot easily raise large sums of money from the capital markets (D) as they are usually limited to personal savings or small business loans.

Maria Has a Lot of Self-Confidence and Business Knowledge