Which of the following is not a disadvantage of operating a business as a sole proprietorship?Multiple choice question.Limited fundingDouble taxation of profitsAutomatic termination upon the owner's deathPersonal liability for business debts
Question
Which of the following is not a disadvantage of operating a business as a sole proprietorship?Multiple choice question.Limited fundingDouble taxation of profitsAutomatic termination upon the owner's deathPersonal liability for business debts
Solution
The correct answer is "Double taxation of profits". This is not a disadvantage of operating a business as a sole proprietorship. In a sole proprietorship, the business income is considered the personal income of the owner, and thus it is only taxed once. This is in contrast to corporations, where profits can be taxed twice - once when the corporation earns them, and again when they are distributed to shareholders.
Similar Questions
Which of the following is a disadvantage of sole proprietorship?Group of answer choicesThe owner has few tax breaks.The owner retains few profitsThe business is difficult to start.The owner absorbs all losses.
Which of the following is not an advantage of operating a business as a sole proprietorship?Multiple choice question.Immunity from personal liabilityManagerial controlMinimal legal formalities in start-upSingle taxation
Which of the following is a disadvantage of sole proprietorships?Multiple Choicesharing of profits with major stockholderslack of continuitylack of business controlstringent government regulationsabsence of a tax-exempt retirement account
Which of the following is not one of the advantages of a sole proprietorship?Multiple Choiceease and cost of formationsecrecyflexibility and control of the businessunlimited liability
Multiple Choice QuestionWhat is a disadvantage of sole proprietorship?Multiple choice question.Unlimited liabilityLimited government regulationYou get to keep your profitsTaxed at a lower rate
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.