A sole proprietorship is a business with a single owner who is solely responsible for all liabilities. In the eyes of legal and tax authorities, the business and the operator are one and the same.
For example, a freelance web designer operates as a sole proprietorship under her own name, reporting all business income on her personal tax return and retaining full control over decisions. When she applies for a small business loan, the lender reviews her personal tax filings and credit history since the business and individual are legally indistinct.
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