Which description matches a sole proprietorship?

Which description matches a sole proprietorship?

• A. A form of business organization owned by two or more persons who agree on a specific division of responsibilities and profits.
• B. A form of business organization owned by a single individual who makes all the business decisions, receives all the profits, and is responsible for any losses.
• C. A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law.
• D. A business organization owned and operated by a group of individuals for their mutual benefit.

Answer: (B)

Ownership and control by a single person, with all profits and losses borne by that person, defines a sole proprietorship. In this setup there’s no legal separation between the owner and the business, so one person makes all the decisions and receives all the profits while being responsible for any losses. This distinguishes it from a partnership (two or more owners sharing responsibilities and profits), a corporation (a separate legal entity), and a cooperative (owned by members for mutual benefit). So, the description that describes a single individual who makes all decisions, earns all profits, and covers all losses matches a sole proprietorship.

Ownership and control by a single person, with all profits and losses borne by that person, defines a sole proprietorship. In this setup there’s no legal separation between the owner and the business, so one person makes all the decisions and receives all the profits while being responsible for any losses. This distinguishes it from a partnership (two or more owners sharing responsibilities and profits), a corporation (a separate legal entity), and a cooperative (owned by members for mutual benefit). So, the description that describes a single individual who makes all decisions, earns all profits, and covers all losses matches a sole proprietorship.