Sole proprietorship
In one sentenceA commercial business owned by one person and registered in their name, without a legal personality independent of its owner.
Simply put
A sole proprietorship is not a company: its finances are its owner's finances, so the owner is liable for its debts with all their personal assets. It is simpler to register and manage.
For accounting, keep the business's accounts separate from your personal expenses, and record what you take for yourself in a personal drawings account, not as an expense, so you know the business's real profit.
Example
The owner of a grocery registered as a sole proprietorship bought goods on credit and did not pay. The supplier may claim from the grocery owner's personal assets, not from the grocery alone. Had it been a limited liability company, the claim would usually have been limited to the company's assets.
Don't confuse it with
Limited liability companyIt may also be founded by one person, but it is an independent legal person and its owner's liability is limited to their share.