North Carolina Building Contractor License Practice Exam

Which form of business is the easiest to start and stop?

1. Corporation

2. Partnership

3. Sole proprietorship

4. Limited liability company

The correct answer is: Sole proprietorship

The sole proprietorship is often considered the easiest form of business to start and stop due to its simplicity and minimal regulatory requirements. Starting a sole proprietorship typically involves little more than obtaining any necessary licenses or permits, and there are no formal registration processes required at the state level, making it accessible for most individuals. When it comes to discontinuing a sole proprietorship, the process is straightforward as well. The owner simply decides to stop operating the business and does not need to go through any formal dissolution processes, which is a requirement for corporations and limited liability companies. This lack of bureaucratic hurdles is a significant factor in why individuals may choose a sole proprietorship, especially when they are testing the waters with a new business idea or operating on a small scale. In contrast, other business structures like corporations or LLCs involve more complex regulations, increased paperwork, and formalities in both their establishment and termination, which can create obstacles for those looking for a straightforward approach to business ownership.