What is a sole proprietorship?

• A. A business owned by one person
• B. A company traded on the stock market
• C. A partnership between two or more individuals
• D. A type of nonprofit organization

Answer: (A)

A sole proprietorship is defined as a business owned by one individual. This structure allows the owner to have complete control over the business and its operations, making decisions independently. The owner is entitled to all profits generated by the business but is also personally responsible for any debts and liabilities incurred. This type of business is often favored for its simplicity in formation and tax advantages, as the income is typically reported directly on the owner's tax return, avoiding the double taxation that can occur with corporations.

In contrast, the other options describe different business structures: a company traded on the stock market typically refers to a corporation, which involves multiple shareholders and complex regulations; a partnership involves two or more individuals working together in a business; and a nonprofit organization focuses primarily on a social cause rather than generating profits for owners or shareholders.