What term describes an unincorporated, one-owner business, such as a farm or professional practice?

• A. Sole Proprietorship
• B. Partnership
• C. Corporation
• D. Franchise

Answer: (A)

This describes a sole proprietorship: an unincorporated business owned by a single person. It’s the simplest, most common form for small farms or professional practices. The owner has complete control and keeps all profits, and the business isn’t treated as a separate legal entity from the owner, so income is taxed on the owner’s personal return. The trade-off is that the owner faces unlimited personal liability for the business’s debts and obligations.

Why the other options don’t fit: a partnership involves two or more owners, sharing control and liability; a corporation is a separate legal entity with its own rights and liabilities, requiring formal incorporation; a franchise is a brand and operating system that can be owned by various structures, but it describes a business model rather than the specific ownership form.