A sole proprietorship: a. provides limited liability for its owner. b. has its profits taxed as personal income. c. can generally raise significant capital from non-owner sources. d. involves significant legal costs during the formation process. e. has an unlimited life.

Question

Moshe Middleton

Business

4 April, 20:40

A sole proprietorship: a. provides limited liability for its owner. b. has its profits taxed as personal income. c. can generally raise significant capital from non-owner sources. d. involves significant legal costs during the formation process. e. has an unlimited life.

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Answers (1)

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Alina Rice · Answer 1

The correct answer is option b.

Explanation:

A sole proprietorship can be defined as a business that is run by only one person. It is not a separate legal entity and is easy to form and the owner controls the whole business.

The disadvantage of a sole proprietorship is that there is an unlimited liability. There is no distinction between private and business assets. It does not have an unlimited life, with the death of owner it is generally shut down. The main source of capital is the owner.