Jasmine runs a store that sells commercial kitchen equipment. She started the business with her own money and solely manages the day-to-day operations of the business. Which of the following is true in this scenario?Multiple ChoiceJasmine’s business will be subjected to double taxation.Jasmine will have to share her profits with stockholders.Jasmine’s business will be constantly regulated by federal and state laws.Jasmine must file articles of incorporation to start her business.Jasmine can easily dissolve the business whenever she wants.
Question
Jasmine runs a store that sells commercial kitchen equipment. She started the business with her own money and solely manages the day-to-day operations of the business. Which of the following is true in this scenario?Multiple ChoiceJasmine’s business will be subjected to double taxation.Jasmine will have to share her profits with stockholders.Jasmine’s business will be constantly regulated by federal and state laws.Jasmine must file articles of incorporation to start her business.Jasmine can easily dissolve the business whenever she wants.
Solution
The correct answer is: Jasmine can easily dissolve the business whenever she wants.
Explanation:
Jasmine's business is a sole proprietorship since she started it with her own money and manages it herself.
- Sole proprietorships are not subjected to double taxation. This is a characteristic of corporations.
- Jasmine does not have to share her profits with stockholders because she is the sole owner of the business.
- While all businesses must follow federal and state laws, the phrase "constantly regulated" might imply a higher level of regulation than a sole proprietorship typically experiences.
- Filing articles of incorporation is a requirement for corporations, not sole proprietorships.
- As the sole owner, Jasmine can decide to close the business at any time, making it relatively easy to dissolve.
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