What is a sole proprietorship?

A sole proprietorship is best defined as a business that is owned and operated by a single individual. This structure allows the owner to retain complete control over the business and its operations, as well as all profits. Additionally, in a sole proprietorship, there is typically less regulatory paperwork and lower startup costs compared to other business forms, such as corporations or partnerships.

This type of business entity is also characterized by unlimited liability, meaning that the owner is personally responsible for all debts and obligations of the business, which can be both an advantage and a disadvantage. The simplicity and directness of ownership make sole proprietorships a popular choice for many small business owners. Understanding this definition is crucial for anyone looking to start a business, as it influences both legal and financial considerations.