What does the term "sole proprietor" refer to in business?

The term "sole proprietor" refers to a legal structure where one individual owns and controls the business. This structure is characterized by the simplicity of ownership, as the sole proprietor is solely responsible for all aspects of the business, including decision-making and liabilities. The owner receives all the profits and is accountable for any debts incurred by the business. This type of business does not require formal registration with the state as a corporation or partnership would, making it a popular choice for individuals starting out in business.

In contrast, other business structures involve multiple individuals, such as partnerships or corporations, where ownership, responsibilities, and profits are shared. In a partnership, there are two or more owners, whereas a corporation consists of multiple shareholders who possess shares in the business. This highlights the distinguishing feature of sole proprietorships, which is their singular ownership and management structure.