Future Business Leaders of America (FBLA) Business Law Practice Exam

What business structure is owned and operated by a single individual?

1. Partnership

2. Sole Proprietorship

3. Corporation

4. Limited Liability Company

The correct answer is: Sole Proprietorship

A sole proprietorship is a business structure that is owned and operated by a single individual. This arrangement is the simplest form of business organization, where the owner has complete control over all decisions and retains all the profits generated by the business. The owner is personally liable for all debts and obligations of the business, which means there is no legal distinction between the owner and the business. In contrast, a partnership involves two or more individuals sharing ownership and management responsibilities, which does not fit the criteria of being owned by a single individual. A corporation is a more complex structure that is a separate legal entity from its owners, providing limited liability protection and requiring formal procedures like board meetings and minutes. A limited liability company (LLC) combines elements of both a corporation and a partnership, offering flexibility in management and limited liability protection but is not a single-owner structure. Thus, the sole proprietorship is the only choice that directly corresponds to being owned and operated by one person.