Sole Proprietorship Flashcard

Front

What are the advantages of a sole proprietorship?

Back

Complete control and decision-making power, easy and inexpensive setup, and ability to keep all profits.

Front

What are the disadvantages of a sole proprietorship in the context of a food truck business? Options: Limited personal liability, limited access to capital, limited growth potential, continuity; Limited personal liability, limited access to capital, unlimited growth potential, continuity; Limited personal liability, unlimited access to capital, unlimited growth potential, continuity; Unlimited personal liability, limited access to capital, limited growth potential, lack of continuity

Back

Unlimited personal liability, limited access to capital, limited growth potential, lack of continuity

Front

Who is correct about the definition of a sole proprietorship? Aiden says, 'A sole proprietorship is a type of corporation.' Abigail says, 'A sole proprietorship is a business owned and operated by a single individual.' Scarlett says, 'A sole proprietorship is a business owned and operated by multiple individuals.' The passerby says, 'A sole proprietorship is a non-profit organization.'

Back

Abigail

Front

Who has the correct understanding of a sole proprietorship? Nora suggests they should form a corporation, James thinks they should form a limited liability company, and Ava believes they should form a partnership. However, you know that they are actually planning to start a sole proprietorship, which is not a separate legal entity from its owner.

Back

None of them

Front

Mia, Harper, Aria, Abigail, Daniel, and William are starting a bakery business together. If they choose to operate this bakery as sole proprietors, what would be their liability?

Back

Unlimited

Front

What are some examples of sole proprietorship businesses?

Back

Freelancers, consultants, small retail shops, independent contractors

Front

Imagine a scenario where Harper, Abigail, Liam, Michael, Samuel, and Aiden started a small bakery shop as a sole proprietorship. What would be the tax implications for them?

Back

They are personally responsible for all taxes on business income and must report it on their personal tax return using Schedule C.

Front

What process do Olivia, Ava, Benjamin, and Henry need to follow to start a sole proprietorship for their lemonade stand?

Back

They need to choose a business name, register the name, obtain necessary licenses and permits, obtain an EIN, set up a business bank account, keep track of expenses and income, comply with tax requirements, obtain insurance, and start operations.

Front

Rohan, Henry, and Avery are planning to start their own food trucks as sole proprietors. What are some common challenges they might face in this venture?

Back

Unlimited personal liability, difficulty in raising capital, limited resources, and the need to handle all aspects of the business themselves.