What defines a sole trader?

A sole trader is defined as a business that is owned and operated by a single individual. This structure is characterized by the fact that the owner has full control over the business and is responsible for all aspects of its operation, including decision-making, profits, and liabilities. Sole traders benefit from simplicity in setup and operation, as there are fewer regulatory requirements compared to other business structures.

In contrast, options that refer to multiple partners or corporations describe different business entities. Businesses set up by multiple partners fall under the category of partnerships, where two or more individuals share ownership and management responsibilities. A corporation, on the other hand, is a legal entity separate from its owners, involving more complex regulations and potentially multiple shareholders. A franchise owned by a single individual is a specific type of business arrangement but does not fit the general definition of a sole trader, as it often involves operating under the conditions set by the franchisor rather than completely on one's own terms. Thus, the accurate definition remains that a sole trader is solely run by one person.