Sole Proprietorship

A photographer wants to start taking clients without any formal business registration. She chooses to create a sole proprietorship. Which advantage does this situation best illustrate?

• Ease of setup and maintenance

• High government regulation

• Complex legal requirements

• Delayed business activities

What happens to a sole proprietorship when the owner dies?

• The business dies with the owner

• The business is automatically transferred to the next of kin

• The business becomes a corporation

• The business is sold to the government

Consider a scenario where a sole proprietor wants to attract investors but is struggling. Using your understanding of sole proprietorship disadvantages, what might be the cause?

• Limited ability to raise money from investors due to business structure

• Too many employees

• Excessive government support

• High business continuity

If you want to operate your sole proprietorship under a different name, what should you do?

• Get an EIN number

• File a DBA (Doing Business As)

• Open a business bank account

• Obtain a business license

Which of the following is a major risk for the owner of a sole proprietorship?

• Double taxation of profits

• Shared decision-making with partners

• Unlimited personal liability for business debts

• Strict separation of personal and business assets

What is one reason a sole proprietorship might be preferred by someone starting a small business?

• Simple tax filing process

• Mandatory board of directors

• Ability to issue stock

• Limited liability protection

Which statement best describes the control a sole proprietor has over their business?

• Decisions must be approved by a board

• Control is shared with shareholders

• Limited control due to government ownership

• Full control over all business decisions