The World of Sole Proprietorship Business

What is a sole proprietorship and how does it differ from other business structures?

Based on the data, which one of the following statements concerning a sole proprietorship is correct?

Answer:

A sole proprietorship is a business organization owned and operated by one person. The owner is personally responsible for all the company's debts and liabilities.

A sole proprietorship is a type of business entity that is owned and run by a single individual. Unlike other business structures such as partnerships or corporations, a sole proprietorship does not have a separate legal identity from its owner. This means that the owner has unlimited personal liability for the debts and obligations of the business.

One of the key differences between a sole proprietorship and other business structures is the level of liability. In a sole proprietorship, the owner is personally responsible for the business's debts and legal obligations. This is in contrast to a corporation or a limited liability company (LLC), where the business entity itself is liable for its debts and obligations.

While a sole proprietorship offers simplicity and flexibility in terms of management and decision-making, it also exposes the owner to greater risk as their personal assets are at stake. It is important for individuals considering forming a sole proprietorship to understand the implications of unlimited personal liability.