Barber Practice State Board Practice Exam

In a sole proprietorship, the owner receives all ____.

1. liabilities

2. profits

3. losses

4. responsibilities

The correct answer is: profits

In a sole proprietorship, the owner receives all profits generated by the business. This structure is designed for simplicity and allows the owner to have complete control over the operations. As the sole proprietor, the individual is entitled to all the income the business earns, making profits an attractive aspect of this business model. This is important because it directly ties the owner’s efforts and investments in the business to their personal financial gain. Essentially, every dollar earned goes to the owner, allowing for the potential for substantial profit if the business is successful. The model also emphasizes the owner's role as the primary decision-maker, which means they directly benefit from the business's success.