Question

Which best describes the difference between sole proprietorships and partnerships?

Sole proprietors keep all profits and have unlimited liability, while partners split profits and share liabilities.
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 pay taxes only on business profits, while partners do not have to pay taxes on profits.

Answer 1

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

Explanation: A sole proprietor owns the business alone and receives all profits but is personally liable for all debts. In a partnership profits (and liabilities) are shared among partners (who typically have joint and several liability).