What defines a sole proprietorship?

A sole proprietorship is defined as a business that is owned and operated by a single individual. This structure is one of the simplest forms of business ownership, where the owner has complete control over the business operations and retains all profits. The owner also bears all liabilities, meaning that personal assets are at risk if the business incurs debts or legal issues.

The simplicity of a sole proprietorship allows for easy establishment and minimal regulatory requirements, which appeals to many small business owners starting their ventures. Unlike corporations or partnerships, which involve multiple parties and include more complex legal frameworks and formalities, a sole proprietorship provides a clear, straightforward approach to business ownership.