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

Question

Quizplus · Accepted Answer

As the sole proprietor of a business, there is no legal distinction between the owner and the business. Therefore, the owner is personally liable for all debts and obligations of the business and may be forced to sell personal assets to pay off the debts. A sole proprietorship is not structured as a limited liability company, nor are there owners to share profits as in a partnership. The profits of a sole proprietorship are taxed only once as personal income. While sole proprietorships may not be the most common form of business ownership, they are still a popular choice for small businesses.

Which One of the Following Statements Concerning a Sole Proprietorship