Definition: A type of business entity where a company is owned and run by only one individual and where no legal distinction is made between the owner and the entity.
All profits and losses directly affect the finances of the owner meaning that all assets of the business are owned by the owner and all debts must be paid from their personal resources.
The owner has unlimited liability as in some partnerships. The difference being the owner is not in business with any partners.
A sole proprietor may in fact do business with a trade name other than their legal name. As a result, the individual can also open a business account in a bank.
Details and Differences between Business Entities
Learn in greater detail about the benefits and risks of each type of business entity.