Question

Which of the following is an advantage of a sole proprietorship?

a. sole proprietors are attractive candidates for investor
b. sole proprietor has limited liability for all claims against the business.
c. capital can be raised through the sale of stock up to the amount authorized in the corporate charter.
d. the income from the business is taxed only once at the owner's personal income tax rateit is easier for sole proprietors to raise debt capital.

Answer 1

The key advantage of a sole proprietorship is that business income is taxed only once on the owner's personal tax return, avoiding the potential of double taxation that can occur with corporations.

Step-by-step explanation:

The advantage of a sole proprietorship is that d. the income from the business is taxed only once at the owner's personal income tax rate. Unlike corporations that can face double taxation—where income is taxed at the corporate level and again as shareholder dividends—sole proprietors report business income and losses on their personal tax returns. This simplifies the tax process and tends to be more favorable for the business owner.