1. A sole proprietorship is similar to a partnership in: (Choose 2 answers.)

a) liability for debt.

b) the ability to have an owner/member who does not participate in the business.

c) how taxes are paid directly by the owner, not the company.

d) the minimum number of owners.

2. Which of the following is a disadvantage of operating as a sole proprietorship?

a) The owner of a sole proprietorship is personally liable for all business debts.

b) Forming a sole proprietorship requires extensive paperwork to be completed by a lawyer and filed with the appropriate state office.

c) A sole proprietorship may only be run as a non-profit organization.

d) Sole proprietorships are taxed at a higher rate than corporations.

3. Which of the following are the advantages of operating as a sole proprietorship? Choose 2 answers.

a) The owner is not personally liable for business debts if the business is officially registered.

b) Forming a sole proprietorship is simple and relatively inexpensive.

c) The business may conduct an initial stock offering once it has made a profit in four consecutive quarters.

d) Sole proprietorships are not taxed.