Which one of the following statements is correct with respect to sole proprietorships?

A) A sole proprietorship is a separate legal entity with one shareholder.
B) A sole proprietorship involves limited liability.
C) The sole proprietor is a society under the Societies Act.
D) A sole proprietorship involves unlimited liability for the proprietor.
E) The sole proprietor is restricted to service type businesses.

Sole Proprietorship

A business owned and operated by one person, where there is no legal distinction between the owner and the business.

Unlimited Liability

A legal obligation where business owners and partners are personally responsible for all debts and liabilities of the business.

Societies Act

Legislation that governs the registration and management of not-for-profit corporations or societies in certain jurisdictions.