Sole Proprietorship - Explained

The video tutorial explains the characteristics of a sole proprietorship, including its creation, continuity, control, ownership, personal liability, and taxation. It highlights that a sole proprietorship is formed by engaging in profit-driven activities independently. The sole proprietor has complete control and ownership, but also bears full personal liability. Profits are taxed as personal income, and there is no separation between personal and business assets.

What is required to form a sole proprietorship?

• Registering with the government

• Engaging in an activity for profit

• Filing legal documents

• Hiring employees

Why can't a sole proprietorship be sold or passed down?

• It is tied to the individual

• It requires government approval

• It is too complex

• It needs a board of directors

Who has the ultimate control in a sole proprietorship?

• The customers

• The employees

• The government

• The sole proprietor

What happens if a sole proprietorship incurs a business liability?

• The sole proprietor is personally liable

• The business is protected

• The liability is ignored

• The liability is transferred to employees

What is a key characteristic of a sole proprietorship regarding ownership?

• It can have multiple owners

• It is owned by the government

• It is owned by a single individual

• It is owned by a corporation

How is the income of a sole proprietorship taxed?

• As corporate income

• As tax-exempt income

• As personal income

• As partnership income

What determines the compensation of a sole proprietor?

• Government regulations

• The amount withdrawn from the business

• Market conditions

• Employee salaries