What is the definition of a sole proprietor?

A sole proprietor is defined as an individual who owns and manages a business independently. This means that a sole proprietor is solely responsible for all aspects of the business, including its successes, liabilities, and decision-making processes. The simplicity of this business structure allows for complete control over operations and finances, which appeals to many entrepreneurs seeking to establish their own ventures without the complexities of partnerships or corporate frameworks.

In contrast to other business structures, such as partnerships or corporations where multiple individuals or shareholders play a role in ownership and management, a sole proprietorship is characterized by its singular focus on one owner. This structure is often used by small businesses, freelancers, and independent contractors, as it involves relatively less bureaucracy and makes it easier to report income and expenditures directly on personal tax returns. This distinction emphasizes the unique position of a sole proprietor in the business landscape.