Understanding Sole Proprietorship: Easy Creation and Flexibility

Which of the statements below concerning a sole proprietorship is true?

a. A sole proprietorship is taxed the same as a C corporation.
b. A sole proprietor can generally raise large sums of capital quite easily.
c. Transferring ownership of a sole proprietorship is easier than transferring ownership of a corporation.
d. It is easy to create a sole proprietorship.
e. The life of a sole proprietorship is potentially unlimited.

The answer is: D) It is easy to create a sole proprietorship.

Explanation:

One of the main characteristics of a sole proprietorship is the flexibility of setting it up or closing it.

Since a sole proprietorship is the most basic type of business, it is easy to create and probably the most common type of business in the whole world. For example, an accountant or a lawyer setting up an office, or even a housewife selling handicrafts through eBay.

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