A sole proprietorship:A) provides limited financial liability for its ownerB) involves significant legal costs during the formation processC) has an unlimited lifeD) has its profits taxed as personal incomeE) can generally raise significant capital from non-owner sources
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D) has its profits taxed as personal income
Sole proprietorships are unincorporated businesses owned and run by a single individual. In a sole proprietorship, there is no legal distinction between the owner and the business, which means the business profits are treated as the personal income of the owner. The owner includes these profits on their personal tax return and pays income tax based on their total personal income.