How might a sole proprietorship have a possible tax advantage?
A) It does not have to make tax payments until the end of the year.
B) It does not have to pay federal income taxes.
C) It does not have to charge sales tax on its merchandise.
D) It does not pay special state and federal taxes that corporations pay.
E) It is subject to a form of double taxation.

Question

Quizplus · Accepted Answer

Sole proprietorships do not have to pay special state and federal taxes that corporations are required to pay, such as corporate income taxes and franchise taxes. This can result in a tax advantage for the sole proprietor as they are only required to pay personal income tax on their profits.

How Might a Sole Proprietorship Have a Possible Tax Advantage