Question

Which of the following is a false statement regarding a sole proprietorship?

A) A sole proprietorship requires few legal formalities.
B) A sole proprietor has complete control of the management of the business.
C) The sole proprietor keeps all the profits from the business.
D) Profits are taxed as the personal income of the sole proprietor.
E) A sole proprietor is not personally liable for the obligations of the business.

Answer 1

E) A sole proprietor is not personally liable for the obligations of the business.

Step-by-step explanation:

Sole proprietorship is a kind of business owned by one man. Characteristics of a sole proprietorship includes;

• A sole proprietorship requires few legal formalities.
• A sole proprietor has complete control of the management of the business.
• The sole proprietor keeps all the profits from the business.
• Profits are taxed as the personal income of the sole proprietor.

It is the oldest and simplest form of business.

The answer is a sole proprietor is not personally liable for the obligations of the business.