What is the primary characteristic of a sole proprietorship?

The primary characteristic of a sole proprietorship is that it is a business owned by one individual. This structure is the simplest form of business ownership and involves a single person operating and managing the business. The owner has complete control over all decision-making processes and is entitled to all profits generated by the business.

In a sole proprietorship, there is no legal distinction between the owner and the business entity, which means that the owner is personally responsible for all debts and liabilities incurred by the business. This aspect highlights the inherent risk associated with this type of business structure, as personal assets can be at risk if the business fails.

Other options, such as a business owned by multiple individuals, a limited liability structure, or a partnership, do not accurately define a sole proprietorship. These alternatives imply shared ownership or legal protections that are not characteristics of a sole proprietorship.