Which of the following statements is TRUE of a sole proprietorship?
A) A sole proprietorship joins two or more individuals as co-owners.
B) The sole proprietor is personally liable for the liabilities of the business.
C) A sole proprietorship is taxed separately from the owner.
D) A sole proprietorship has to pay business income taxes.

Question

Quizplus · Accepted Answer

A sole proprietorship is a business owned and operated by a single individual who is personally liable for the liabilities of the business. This means that the owner's personal assets may be at risk if the business incurs debts or legal troubles. Option A is incorrect as a sole proprietorship is owned by a single individual. Option C is incorrect as a sole proprietorship is not taxed separately from the owner. Option D is incorrect as a sole proprietorship is not required to pay business income taxes; instead, the owner reports the business income on their personal tax return.

Which of the Following Statements Is TRUE of a Sole