Which example best fits a sole proprietorship?

Which example best fits a sole proprietorship?

• A. A Franchise
• B. A Corporation
• C. A Restaurant
• D. A Partnership

Answer: (C)

Ownership structure determines whether a business is a sole proprietorship. A sole proprietorship is owned and operated by a single individual, with no separate legal entity between the owner and the business. A restaurant fits this idea well because it is often run and owned by one person who makes day-to-day decisions and bears the profits and losses personally, without forming a separate company. In contrast, a corporation is a separate legal entity owned by shareholders, so it isn’t a sole proprietorship. A partnership involves two or more owners, which also isn’t a sole proprietorship. A franchise can be owned by a single person, but the arrangement is a contractual relationship with the franchisor and can involve additional structure, so it’s not inherently a sole proprietorship.

Ownership structure determines whether a business is a sole proprietorship. A sole proprietorship is owned and operated by a single individual, with no separate legal entity between the owner and the business. A restaurant fits this idea well because it is often run and owned by one person who makes day-to-day decisions and bears the profits and losses personally, without forming a separate company. In contrast, a corporation is a separate legal entity owned by shareholders, so it isn’t a sole proprietorship. A partnership involves two or more owners, which also isn’t a sole proprietorship. A franchise can be owned by a single person, but the arrangement is a contractual relationship with the franchisor and can involve additional structure, so it’s not inherently a sole proprietorship.