Future Business Leaders of America (FBLA) Business Management Practice Test

A sole proprietorship is a business owned by how many individuals?

1. One company

2. Relatives

3. One person

4. The bank

The correct answer is: One person

A sole proprietorship is defined as a business that is owned and operated by one individual. This structure allows the owner to have complete control over all business decisions, financial gains, and responsibilities. The simplicity of a sole proprietorship is one of its primary attractions, as it does not require formal registration with the state (though local permits may still be necessary) and involves less regulatory paperwork compared to other business structures. The owner’s personal assets are also tied to the business, meaning that they are personally liable for any debts or obligations that the business incurs. This characteristic further emphasizes that there is only one individual managing the enterprise. The nature of sole proprietorships makes them ideal for small business owners who prefer to be their own boss and retain all profits without sharing them with partners or stakeholders.