Which of the following statements is true regarding the advantages and disadvantages of a sole proprietorship?
A) A sole proprietorship cannot be created without formal agreements or state filings.
B) The proprietor reports income from the business as corporate tax.
C) The proprietor alone bears liability for the losses.
D) It is usually easy for sole proprietorships to raise capital.

Question

Quizplus · Accepted Answer

The sole proprietorship business structure places all liability on the owner of the business, leaving them personally responsible for any losses or debts incurred by the business. However, it is easier to set up a sole proprietorship compared to other structures and there are no corporate tax filings required as it is taxed on the personal income tax return of the owner. It can also be difficult for sole proprietorships to raise capital as they are often seen as riskier investments without the protection of a separate legal entity.

Which of the Following Statements Is True Regarding the Advantages