If an Individual Forms a Sole Proprietorship, Which Nontax Factor

question 47

Multiple Choice

If an individual forms a sole proprietorship, which nontax factor will be of greatest benefit to the sole proprietor?

• A) Liability protection.
• B) Legal flexibility in defining rights and responsibilities of owners.
• C) Facilitates initial public offerings.
• D) Minimal time and cost to organize.

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Definitions:

Form 1099-INT

A tax form used to report interest income earned from banks, savings accounts, or other financial institutions during the tax year.

Interest Income

Income earned from deposit accounts such as savings accounts, CDs, or from loans and bonds issued by the taxpayer.

Workers' Compensation

Insurance providing wage replacement and medical benefits to employees injured in the course of employment.

Taxable

Refers to income or transactions that are subject to tax by governmental entities according to certain rules and regulations.