Nick Wants to Start His Own Business

question 233

Multiple Choice

Nick wants to start his own business. Nick should consider a sole proprietorship if he:

• A) expects rapid growth and wants to be able to raise a large sum of money.
• B) wants to make it easy to attract qualified employees.
• C) wants to be his own boss and can accept unlimited liability.
• D) wants to minimize the financial risk he must accept as the owner of a business.

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Definitions:

Minimum Tax Exemption

An amount exempt from alternative minimum tax (AMT), designed to ensure that taxpayers with substantial income pay at least a minimum amount of tax.

Book Income

The income calculated for accounting purposes, rather than for tax purposes, often used to measure a company's financial performance.

Taxable Income

The amount of income used to determine how much tax an individual or a corporation owes to the government.

Federal Income Tax

A charge imposed by the IRS on the yearly income of individuals, corporations, trusts, and various legal bodies.