Accounting Types of Organiztions Week 4 P3

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What defines a sole proprietor?

• A business with multiple owners.

• A business that has formed a separate legal entity.

• A business where the owner and the business are legally indistinguishable.

• A business that requires a significant formation fee.

What is required if a sole proprietor wishes to operate under a trade name different from their own legal name?

• Forming a corporation.

• Obtaining a DBA (Doing Business As).

• Registering with the federal government.

• Paying a fixed $50 fee.

If a sole proprietorship owes more than $1000 in taxes by year-end, what does the IRS require?

• Monthly tax payments.

• Estimated quarterly tax payments.

• A single payment at the end of the year.

• No additional payments, only the annual income tax return.

What is a significant drawback of operating as a sole proprietor?

• High formation fees.

• Extensive ongoing maintenance responsibilities.

• Lack of personal liability protection.

• Inability to use a trade name.