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

Question

Quizplus · Accepted Answer

In a sole proprietorship, the owner has unlimited personal liability for the company's debts, meaning that personal assets can be seized to pay off company debts. This is not the case in a limited liability company (LLC). A is incorrect because sole proprietorships are actually the most common form of business ownership. B is incorrect because the profits of a sole proprietorship are only taxed once as personal income for the owner. C is incorrect because a sole proprietorship does not have multiple owners to establish a partnership agreement. E is incorrect because a sole proprietorship is not the same as an LLC, although it can be converted to one.

Which One of the Following Statements Concerning a Sole Proprietorship