A sole proprietorship is defined as:

A sole proprietorship is indeed defined as a business entity run by one person. This structure means that an individual operates and manages the business on their own, with complete control over all decisions and operations. One of the key characteristics of a sole proprietorship is the simplicity and ease of establishment, as it does not require formal registration or incorporation with the state, unlike corporations or partnerships.

In a sole proprietorship, the owner receives all profits generated by the business and is also personally responsible for any debts or liabilities incurred. This personal liability means that the owner's personal assets can be at risk if the business fails or faces legal issues. This singular ownership structure is particularly appealing to many entrepreneurs because it allows for quick decision-making and direct management of the enterprise without the complexities that larger business forms might entail.

Understanding the nature of a sole proprietorship is essential for anyone considering starting their own business, as it lays the foundational knowledge about how businesses can be structured.