Question

Which best describes the difference between sole proprietorships and partnerships?
Responses

Sole proprietors pay taxes only on business profits, while partners do not have to pay taxes on profits.
Sole proprietors pay taxes only on business profits, while partners do not have to pay taxes on profits.

Sole proprietors share responsibilities, while partners are responsible for only a portion of the business.
Sole proprietors share responsibilities, while partners are responsible for only a portion of the business.

Sole proprietors split profits and share liabilities, while partners keep all profits and have unlimited liability.
Sole proprietors split profits and share liabilities, while partners keep all profits and have unlimited liability.

Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.

Answer 1

"Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities."

Explanation: a sole proprietorship has one owner who receives all business profits and is personally liable for debts. A partnership has two or more owners who share profits, losses, and liability (unless structured as limited partners with different liability).