Which statement about a sole proprietorship is TRUE?

Which statement about a sole proprietorship is TRUE?

• A. The business, or any part of it, can be sold, altered, or exchanged at will.
• B. The business must have at least two owners.
• C. The business is always taxed as a corporation.
• D. The business cannot borrow money.

Answer: (A)

In a sole proprietorship, the owner controls everything because there’s no separate legal entity apart from the person. That means the owner can decide to sell the business or transfer its assets, change how it’s operated, or even restructure the business at will. The business itself isn’t a separate company, so ownership and control stay with that one person, making the idea of selling or exchanging parts of the business entirely within the owner’s discretion.

Two or more owners aren’t required—this structure is defined by a single owner. It isn’t taxed as a corporation; profits and losses flow directly to the owner and are reported on the owner's personal tax return. And yes, the owner can borrow money, though they’re personally liable for repayment.