What is a key characteristic of a sole proprietorship?

A sole proprietorship is defined as a business that is owned and operated by one individual. This structure is the simplest form of business organization and allows the owner to have complete control over the business decisions and operations. The key characteristic of a sole proprietorship is its singular ownership, which facilitates easy decision-making and a direct connection between the owner and the business.

In this structure, the owner also bears full responsibility for the business’s liabilities, meaning that there is no legal distinction between the owner and the business itself. This contrasts sharply with other forms of business ownership, such as partnerships or corporations, which involve multiple individuals or require formal agreements and have different implications for liability. In a sole proprietorship, the ease of setting up the business and the minimal regulatory requirements are notable advantages, making it an appealing option for many small business owners.