Question

With respect to taxes, the sole proprietorship:

A. pays taxes on the profits of the business at the same rate that corporations pay taxes.
B. pays taxes on the profits of the business, at the owner's personal tax rate.
C. pays taxes only if there are no expenses associated with the business.
D. is permitted to determine its own tax rate and schedule of payments.

Answer 1

A sole proprietorship pays taxes on the profits of the business at the owner's personal tax rate.

Step-by-step explanation:

A sole proprietorship pays taxes on the profits of the business at the owner's personal tax rate (option B).

As the sole proprietorship is not a separate entity from the owner, the profits of the business are treated as personal income for the owner and are subject to the owner's personal income tax rate.

This is different from corporations, which have separate tax rates and structures.