Answered

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

Ait is easy to expand if it succeeds.
Bit faces few government rules.
Cit is easy to get financing to start one.
Dit is exempt from federal income taxes.?

Verified Answer :

mincedmeatman

Hey there! Hello!

Speaking from first-hand experience as someone researching to start a small business in the near future, I think I can help you out. 

A sole proprietorship is basically a business owned by one person, and their business typically isn't distinguished from the single owner. The owner will assume full control and responsibility for the business, meaning that without moving up to a business model like LLC (limited liability), they can be put in some pretty bad places if they mess up on something and are sued for it. 

As for your answers, let's start with the first one. Just because you start out your business on a model that's generally pretty simple to start and manage doesn't mean that it gets easier as you want to expand it. You'll need to get more permits, employees, coverage, and have more money to pay, time to shell out, paper work to fill out... the list goes on and on. It definitely does not make your business easier to expand if you start it out as a sole proprietorship. 

For your second answer, I would say that amongst the other options for a business, a sole proprietorship is one of the easiest, if not the easiest. It's the route many people just starting out fresh go, since they don't know how their business is going to be and don't want to commit too much yet. "Government rules" is throwing me off a bit, but I believe that this is the most feasible one on your list.

For your third answer, I would say this answer is false. As I stated above, the proprietor of a business and their business may as well be synonymous – meaning that finances go the same direction. This can lead many business owners into being personally accountable for any debts they may fall victim to. This can lead to loaners thinking they're a hazard and refusing to give them a loan. Not to mention how much liability is held on the owner – woof.

The last answer is the biggest no-no on the list. This isn't true for any state in the United States – even Florida, where I reside, where Florida residents starting as sole proprietorships are exempt from paying state taxes. I can pretty much guarantee you that there is no business type or person out there that is exempt from paying federal income taxes, unless they are really, really special.

So, with all that in mind – thanks for sticking with me – your answer should be B. 

I hope this helped you out! Feel free to ask me any additional questions if you have any. :-)

The option B is correct. The advantage of a sole proprietorship is that it faces few government rules.  

Further Explanation:

Sole Proprietorship:

A sole proprietorship refers to the type of enterprise that is run and owned by one person, and there is no concept of the separate legal entity.  The owner and business are treated as one person. The owner has unlimited liability and assumes the unlimited risk.

Justification for the correct and incorrect answer:

A.

It is easy to expand if it succeeds: This option is incorrect.

This statement is incorrect. There is a need for huge cash to expand the business, whether the business succeeds.  

B.

It faces a few government rules: This option is correct.

The government does not put any restrictions on the sole proprietorship as the business is small and the production is less. The sole proprietorship faces less intervention in the business.    

C.

It is easy to get financing to start one: This option is incorrect.

This statement is incorrect. As it is not easy to open a new business and finance the business only with the savings of the sole proprietorship.

D.

It is exempt from federal income taxes: This option is incorrect.

This statement is incorrect. As all the individual, corporations and institutions are earning money have to pay the federal income tax. A sole proprietorship is not exempted from federal income taxes.


Learn more:

1. Learn more about state income tax

https://brainly.com/question/2996312


2. Learn more about sole proprietor  

https://brainly.com/question/999392


3. Learn more about the law in sole proprietor

https://brainly.com/question/5742225


Answer details:

Grade: High School

Subject: Business Studies

Chapter: Organizational structure

Keywords: Sole proprietorship, a limited personal risk, expands, financing, federal income tax, succeeds, government rules,an advantage of sole proprietorship form of business.  


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