What defines a sole trader?

• A. A business owned by multiple partners
• B. A business owned by a single individual with unlimited liability
• C. An incorporated business
• D. A cooperative business structure

Answer: (B)

A sole trader is defined as a business owned by a single individual who has unlimited liability. This means that the owner is personally responsible for all debts and obligations of the business. If the business incurs debts or faces legal issues, the owner's personal assets could be at risk to settle those debts. This structure is straightforward and often chosen by individuals who want full control over their business operations and decisions without sharing authority with partners or shareholders.

The simplicity of being a sole trader allows for easier management and fewer regulatory requirements compared to other business structures, such as corporations or partnerships. This makes it an attractive option for many small business owners looking to start with minimal financial and administrative burden.