What defines a sole proprietorship?

A sole proprietorship is defined as a form of business that is owned and operated by a single individual. This structure allows an individual to have complete control over their business decisions and operations, as there are no partners or shareholders involved. The owner receives all profits but is also personally liable for any debts or liabilities incurred by the business, highlighting the straightforward nature of the sole proprietorship.

In contrast, the other options delineate different business structures. An association of two or more people who are legally co-owners describes a partnership, where multiple parties share responsibility and profits. A legal entity that exists separately from its owners refers to corporations, which provide limited liability protection for owners, separating personal from business assets. Lastly, a trust that holds income-producing real estate assets doesn't align with the characteristics of a sole proprietorship, as it involves a fiduciary relationship and often multiple beneficiaries or trustees. Thus, the defining characteristic of a sole proprietorship is its singular ownership and operation by one person.