Question

In a sole proprietorship, the business and the owner are considered ______.

Options

• two separate legal entities

• a single legal entity

• governed by different laws

• managed under a partnership deed

Answer 1

In a sole proprietorship, the business and the owner are considered a single legal entity.

Explanation:

In a sole proprietorship, the business and the owner are considered one and the same; the proprietor and the business have no separate legal identity. The law does not distinguish between the owner and the business, so all assets, liabilities, and responsibilities belong to the individual. If the owner dies or becomes insolvent, the business is dissolved. This means the business and owner form a single legal entity rather than two separate entities.