Final answer:
Sole proprietors cannot raise money by selling stock; this is a feature of corporations. Sole proprietorships are owned by one individual and do not have the ability to sell shares. Partnerships and corporations have different mechanisms for raising funds and distributing profits.
Step-by-step explanation:
False, it is not easy for sole proprietors to raise large sums of money by selling stock because sole proprietorships are owned by one person and do not issue stock.
Raising capital as a sole proprietor typically involves personal investments, loans, or possibly bringing in additional partners to contribute capital, which would convert the business into a partnership. Partnerships can raise more capital due to greater assets being contributed by multiple partners, but even then, they don't sell stock.
Instead, each partner pays taxes on their share of the income; the business itself does not have to pay taxes. To sell stock requires incorporation, which offers the ability to raise money by selling shares to the public and provides shareholder liability limited to the amount invested in the corporation.
Corporations also have the advantage of being subject to a board of directors and the shareholders once they go public.