What is a "sole proprietorship"?

A sole proprietorship is defined as a business that is owned and operated by a single individual. This structure is characterized by the owner's control over all aspects of the business, including decision-making, profits, and liabilities. One of the key features of a sole proprietorship is that the owner has unlimited liability, meaning they are personally responsible for all debts and obligations incurred by the business. If the business faces financial difficulties, the owner's personal assets may be at risk.

This structure is often chosen for its simplicity and ease of establishment, as it typically requires less regulatory compliance and is less costly to set up compared to other business forms such as corporations or partnerships. While a sole proprietorship allows for complete control, it also means that the owner bears all the risks associated with the business.